So far, 2015 hasn’t been particularly kind to the stock market, with markets down Thursday morning after four straight trading days closing in the red.
Despite this, it’s important for long-term investors to not panic.
As David Rosenberg says, timing the market is less important than time in the market.
In his morning note, Gluskin Sheff’s Rosenberg argues for calm, pointing out that volatility and turbulence happen in every bull market.
He broke down the volatile nature of markets, even bull markets, in an interesting way.
“In 2014, the Dow amassed 9,956 down points on the down days and 11,202 up points cumulatively on the winning sessions,” he noted.
So, while we saw an overall year over year gain of 1,246 points in the Dow in 2014, it was a bumpy ride to get there.
Looking back even further, Rosenberg pointed out that over the course of the last 6 years since the market bottomed, the Dow’s cumulative losses on the down days added up to losing 55,962 points, while the gains on the up days totaled at 67,029 points. Combine those together and you have a huge overall gain, but there were a lot of ups and downs on the path to that gain.
Rosenberg observed that 2014 started out similarly to what we’ve seen over the last two weeks, but that markets ended up showing huge gains by the end of the year.
“The equity market slid 4% last January and by mid-February had corrected 6% — and yet, by the end of 2014, the S&P 500 managed to generate a full-year total return of 14%,” he said.
Even in a healthy bull market, there will be up days and down days. It’s important not to freak out too much on the down days, and to keep a steady hand on the wheel.
“Again, what matters is time in the market, not timing the market.”