Before you jump the gun and call it quits on the market based on a tough week I want you to know a few things;
1. Since 1980 the average intra-year decline in the SP500 has been roughly 14%. 26 out those 34 years despite the average intra-year drop the market closed positive, 76% of the time. That does not mean that the declines were not painful; it’s just a reminder that the market goes UP and DOWN, not up OR down. And, draw-downs are unavoidable, there is no sense in trying to avoid what cannot be avoided.
2. Its never been wise to be a bear for too long. In the last 89 years, stocks closed down 20% or more six times (7%). 35 out of the last 89 years stocks delivered 20%+ returns, (39%). Try to minimize your losses but never forget that the real game is played on the long side.
3. The SP500 annualized gain is 10%; that doesn’t mean that you will make 10% every year, you are going to have good years, bad years, great years, and awful years.
6. Stay thirsty, don’t disengage.