Volatility Does Not Equal a Financial Loss Unless You Sell – 1981-2015

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Volatility Does Not Equal a Financial Loss Unless You Sell – 1981-2015

Market corrections happen fairly often and even in the good years, including fairly significant intra-year declines in recent strong-return years like 2010 and 2012.
• From 1981 to 2015, the S&P 500 Index has experienced at least a 5% intra-year decline (i.e., loss) in every year but one. The average intrayear decline over the past 35 years has actually been 14.1%.
• But notice, equities have still posted positive returns in 29 of those last 35 years with annualized total returns over that period of over 11%.

So let’s take a page from Warren Buffet, when asked by a CNBC personality in 2009 how it felt to have “lost” 40% of his lifetime accumulation of capital, he said it felt about the same as it had the
previous three times it had happened.

The bottom line is, market corrections do not equal a financial loss…unless you sell.

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