Page 97 - June 2022

“If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.” - Warren Buffett
FINANCIAL PLANNING
This is one of my favorite illustrations from my friends at Hartford Funds. Some of these drops were very recent. You can see that number two on that list was March 16, 2020, when the S&P dropped 11.98%. The return after one year was 66.07%. Now imagine if you chose to sell when you saw that drop. Selling is easy. The hard part is getting back in the market. Psychologically, you want
to wait until the price goes below what you
sold at to justify your decision. However,
it’s impossible to time the market. If you stayed invested during the drops in 2020, it’s likely that you would have had handsome returns. There was only one case on that list where there wasn’t a positive return after one year. The other nine returns had more than doubled within one year.
I like to look at recessions as stocks and mutual funds going on sale. Many people
see a drop in price and rush to the exits. The smart ones realize that they can buy the stock at a cheaper price. If your favorite store has
a 20% discount going, chances are you’re
going to make a few purchases. Why not carry this same mindset into the investing world? Recessions don’t last forever. As Warren Buffett famously said, “If you aren’t willing to own
a stock for 10 years, don’t even think about owning it for 10 minutes.”
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