Volatility is Your Friend

From August 1982 to August 1987 the stock market staged a phenomenal 250% increase.  Then in one day in October 1987, the market dropped a record 24%.  Sanity and reality returned.  That’s the stock market.

Over the last 70 years we have had many bull markets (Up) and also many bear markets (Down).  But guess what?  The bull markets averaged going up about 100% and the bear markets on average, declined 30%.  Not only that, the typical bull market lost 3 ¾ years and the classic bear market lingered about 9 months.  Viewed with perspective, that’s a terrific deal.

For more than 100 years, the market has recovered every single time.  It ultimately soared into new high ground.

What causes this continual long-term growth and upward progress?  It is one of the greatest success stories in the world.

The stock market does not go up due to greed; it goes up because of new products, new services, and new inventions, and there are hundreds every year.  The innovative entrepreneurial companies with the best quality new products that serve people’s needs will always be the things that make the stock market higher over the years ahead.

The short-term volatility of the market (bear markets), always create opportunity to take advantage of the next leg up in the market.  In that way volatility is our friend.

Paul Fisher