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Time to panic?

In times like these, perspective is vital.

Take a deep breath and then read the next paragraph carefully.

“By historical standards, Monday’s 504-point decline in the Dow Jones® Industrial Average was indeed large—the 86th-largest one-day percentage loss since 1928, and the 17th biggest since World War II. Does this mean it’s time to jump ship?” Jesse Czelusta, co-editor, InvestmentRx, an investment newsletter, writing in MarketWatch.com on September 17.*

Take another deep breath. Let it out slowly.

Czelusta continues:

“To answer, let’s look at the 16 postwar declines that were larger and ask the following question: What happened afterward?”

You see where this is going, right? Now read this paragraph from Czelusta:

“I calculated several averages for all 16 declines that were larger than Monday’s 4.4% drop.  On average, the Dow was 10.4% higher six months after the decline, 13.8% higher one year after, 27% higher two years after, and 45.6% higher five years after. By contrast, investing in the Dow® on any random day from Jan. 2, 1946, through Monday’s decline would have yielded 37.9% over on average over a five-year period.”

Read that paragraph again. Then you can probably ease up on the deep breathing.

Obviously, past performance does not guarantee future results. But, as Czelusta concludes, “If history is any guide, you would be foolish to succumb to panic.”

One more deep breath. Let it out slowly.

We are not going to panic, not today, not ever.

If you want to talk, please call us at 401-943-2210.

Sincerely,                                                                  

Barry Misbin                                                                            Rob Radoccia

 

                       



* http://tinyurl.com/4xx742


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