Investor Education | Learn from stock market history

If you have been investing in the stock market long enough, you have likely known good times and bad. It is the inherent nature of the market, as measured by the Dow Jones Industrial Average (DJIA), the Standard & Poor's (S&P) 500 Index and other well- known indicators, to fluctuate (see page 3).  At other times, the market may be relatively stagnant.

But a main concept gleaned from a historical perspective is that the stock market has proven beneficial to those investors who stay the course over the long run. Thus, the longer the period you invest, the more likely you will be able to weather the inevitable down times.

Conversely, it is difficult to try to "time" the market, not to mention that it is quite a risky proposition. Investors tend to panic when they hear or see reports of a declining stock market,

yet remaining invested in the market over the long term has historically rewarded investors.  Although short-term fluctuations may appear to be random, the stock market tends to reflect the overall growth and productivity of the economy over the long run.

Assuming that you decide to commit to being a long-term stock market investor, you will need to choose investments based on your personal objectives, your tolerance for risk and your time horizon for investing—if you have not done so already. This will normally encompass principles such as asset allocation and diversification, buying and holding strategies, and understanding and implementation of tax-related decisions.  Unless you are a seasoned and sophisticated investor, professional guidance is recommended.

Of course, past performance is no guarantee of future results—if the stock market went up last week, it could easily trend down next week, or vice versa—but including stocks in your portfolio is generally sound financial practice. Do not be motivated entirely by history, but try to learn from it.

This newsletter/advertisement is produced for our clients, friends and associates through an arrangement with WPI Communications, Inc. for the representatives’ use. Although the editorial content is professionally researched, written and edited, neither our firm nor any of its agents, representatives or associates make any representations regarding the accuracy of the content or its applicability to your situation. The information in this communication is not intended as tax or legal advice. In accordance with IRS Circular 230, the information provided herein may not be relied on for purposes of avoiding any federal tax penalties. Any tax advice contained in the body of this material was not intended or written to be used, and cannot be used, by the recipient for the purpose of 1) avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions, or 2) promoting, marketing or recommending to another party any transaction or matter addressed herein. You are encouraged to seek tax or legal advice from an independent advisor.

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