I recently looked into a crystal ball, and this is what I saw happening over the next 13 years:
- The U.S. stock market will experience one of the worst crashes in its history.
- The United States will be involved in several military conflicts.
- Terrorists will attack U.S. navy ships, civilian aircraft, and buildings in American cities.
- Political turmoil and economic meltdowns in several foreign markets will threaten the global economy.
- The U.S. economy will be plagued by budget deficit problems and stock market turmoil.
- We will see worldwide concern and panic that every computer in the world will crash, and that the world's economy will come to a screeching halt.
- U.S. corporate downsizing will result in hundreds of thousands of Americans losing their jobs.
Knowing that all of this was going to happen, would you invest in the market? Of course not - we all know that markets hate economic uncertainty and military conflicts.
WOOPS! I'M SORRY! - I just realized I was actually looking into the past! All of these events actually occurred from 1987 to 2000. And investors who stayed out of the market during these years would have missed out on the following:
- 13 years of the greatest bull market in history,
- The Dow Jones average rewrote history with returns of over 20% for three consecutive years, and
- The Dow grew from below 2,000 to over 10,000, and virtually every other market index hit record highs.
Over the last 100 years we have experienced several wars, many recessions, one depression, entire countries collapsing, fears of a world-wide crisis caused by Y2K, and many other very serious problems. Yet in spite of all of these negative events, the U.S. stock market has still averaged about 10% per year over those 100 years.
So please remain focused on the long term, and avoid reacting emotionally to short term "noise." The biggest obstacle to investment success isn't a lack of opportunity, but a lack of patience.
