Dear Reader,
So far, 2022 has been an incredibly disappointing year in the stock market.
There are two ways to think about this:
1) Those who only began investing in the stock market over the past year or so have experienced a lot of losses.
and
2) Those who've been investing for a while longer have more experience making money in the stock market.
"While the 17% year-to-date loss for the S&P 500 has not brought much cheer to investors this year, those with a medium-to-long-term investment horizon have still managed to bank respectable returns: the U.S. bellwether has generated an annual return of 12.4% in the five years to May 24, 2022," wrote Benedek Vörös, director of index investment strategy at S&P Dow Jones Indices.
Here's a more straightforward way of putting it: The S&P 500 is way higher today than on May 24, 2017.Rolling long-term returns are a great way for investors to think about even the most difficult periods in the stock market.
Even with this year's sell-off, the S&P 500 is considerably higher today than even the peaks of 2000 and 2007.
Also, the lows of 2002 and 2007 only sent the S&P back to levels first breached in the late 1990s.
The stock market is prone to periods of steep sell-offs, and it could take months and perhaps years before the stock market recovers all of its recent losses and rallies to new all-time highs.
It's a challenging process, especially for those new to investing who have spent much of their time in the market in the red.
However, the stock market's financial merits become more apparent the longer you are invested.
When thinking about your investments and savings, try not to dwell on what you may have lost in recent months.
Instead, longtime investors should remember everything they've accumulated over time.
If you're a new investor, consider what history tells you could happen in the years ahead.
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