It was September that I last wrote about this. Yesterday, we were up 3.71% on the S&P 500, as you can see, 1320.65, up 47.28, the largest single day gain in nearly 5 years. I could go on a bit to talk about yesterday and the markets of today and next week, but instead, let’s look at 1986-96. Why? Because it contained both the crash of ’87 and the recession of 1990-91.
During this period, the market still managed to more than triple. I’m sure there were those who were scared out of stocks in 1987, but let’s remember one thing about 1987; the S&P 500 returned 5.7% that year. I recall a conversation I had with a friend on Aug 25, 1987 (I remember because it was the day after his birthday and I took him to lunch). The market had gone up quite a bit and he asked me what I thought. I told him that in the short term anything could happen, but if he sold then who knew when would be the right time to get back in? Those who averaged in over the prior five or so years were still well ahead, even after the crash. By focusing on the long term and not getting into the habit of buying high and selling low, you can achieve your goals and sleep at night.
And at SmartMoney – “Bull Markets Return When You Least Expect” by James Stewart