For investors, it can be easy to feel overwhelmed by the relentless stream of news about markets. Being bombarded with data and headlines presented as affecting your financial well-being can evoke strong emotional responses from even the most experienced investors. Headlines from the so-called lost decade–the 2000s, when the S&P 500 ended below where it began–can help illustrate several periods that may have led market participants to question their approach.
- March 2000:
Nasdaq Stock Exchange Index Reaches an All-Time High of 5048
- April 2000:
In Less Than a Month, Nearly a Trillion Dollars of Stock Value Evaporates
- October 2002:
Nasdaq Hits a Bear-Market Low of 1114
- September 2005:
Home Prices Post Record Gains
- September 2008:
Lehman Files for Bankruptcy, Merrill Is Sold
While these events are more than a decade behind us, they can still serve as an important reminder for investors. For many, feelings of elation or despair can accompany headlines like these. We should remember that markets can be volatile and recognize that, in the moment, doing nothing may feel paralyzing. However, if one had hypothetically invested $10,000 in US stocks in January 2000 and stayed invested, that would be worth approximately $38,400 at the end of 2020.1
When faced with short-term noise, it is easy to lose sight of the potential long-term benefits of staying invested. While no one has a crystal ball, adopting a long-term perspective can help change how investors view market volatility and help them look beyond the headlines.