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Tuesday, September 13, 2022
Today’s newsletter Sam Lawthe author of TKer.coFollow him on Twitter. @ Samuro.
When uncertainty in the world soars, it’s easy for fear to rule and doubt to ruin investment decisions.
High inflation and geopolitical tensions are among the fear factors that have pushed stocks down this year.
But the stock market has an impressive track record of overcoming almost insurmountable odds.
Barry Ritholtz, co-founder and CIO of Ritholtz Wealth Management, recently shared insights In the words of David Booth, co-founder of Dimensional Fund Advisors, he said:
“25 years ago, your crystal ball reveals: Russian debt default, LTCM bankruptcy, dotcom bankruptcy, 9/11 attacks, financial crisis + Great Recession, pandemic killing millions, 3 One market crash.Do you invest your money in stocks?No?You missed a 10x return.”
At Monday’s close of 4,110, the S&P 500 is down significantly from its January high of 4,818. However, the index is still well above the 481 last seen in 1995.
This quote reminded me of what Warren Buffett said in a New York Times op-ed at the depths of the global financial crisis.
“In the long run, stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and costly military conflicts; the Great Depression; Recession and financial panic, oil crises, flu epidemics, and the infamous resignation of the president, yet the Dow rose from 66 to 11,497.”
Earlier this year, BlackRock’s Daniel Prince shared a powerful rendering of these quotes in this annotated long-term chart of the S&P 500.
“In tough times, you want to limit your losses,” Prince wrote. “I wish I had invested more, even when things were going well. We’re all afraid of missing out.”
“But when you’re investing, succumbing to fear is often a losing strategy,” he added. “In many cases, investors with this mindset tend to buy high and sell low because they invest more in rising markets and withdraw in falling markets.”
Investing means understanding that unexpected challenges can arise in the process of achieving your long-term financial goals. And those bumps can be substantial. But it’s part of the deal. In fact, this risk is why stock market returns are relatively high.
It’s almost impossible to ignore the barrage of headlines that put investment decisions on the back burner. So if you’re preoccupied with short-term worries, remember the stock market’s long-term winning history as well.
what to see today
7:00 AM EST: NFIB Small Business OptimismAug (forecast 90.1, last month 89.9)
8:30 AM EST: consumer price indexm/m, Aug (-0.1% forecast, 1.3% m/m)
8:30 AM EST: Consumer price index excluding food and energym/m, Aug (0.3% forecast, 0.3% m/m)
8:30 AM EST: Consumer Price Index, YoYAugust (forecast 8.1%, previous month 8.5%)
8:30 AM EST: Consumer price index excluding food and energyy/y, August (forecast 6.1%, last month 5.9%)
Yahoo Finance highlights
Inflation: Consumer prices likely to ease for second month in a row in August
Twitter whistleblower; founder of Nicola;and Former Uber Executive’s Trial: A Legal Story to Watch
Energy stocks ‘look very attractive,’ says portfolio manager
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