July 31, 2014 – the Dow Jones Industrial Average falls 317 points as nervous “investors” warily contemplate disappointing employment numbers, rising tensions in the Ukraine and in the Middle East, an Ebola outbreak in Africa and, well, probably countless other worrisome economic or geo-political issues.  Media reports shout the news that this one-day drop wipes out the Dow’s gains for the entire year.

Did you happen to hear anyone mention that a number of other more-broadly-diversified measures than the 30 companies in the Dow were still up from 4% to more than 15% year-to-date on this same day?  I’m betting not.  They were.  Just sayin’.

I don’t mean to make light of, or minimize the importance of any of the items of concern I mentioned earlier.  But events and data like these are nothing new.  Four of the most dangerous words for investors to base any decision on are, “It’s different this time.”  Maybe.  But most likely, not.

Go back and look at market history for context.  There’s almost 90 years of very reliable market data for the broad US market.  If that period is divided into decades, there isn’t a single one that doesn’t have at least one, sometimes multiple, events like these.  Many of those earlier events make these look like “below the fold” news, at best.

Yet, through that 90-year period, the broad US market returned a near-10% annualized return to investors who were suppliers of capital.  There was a very simple, but not easy, requirement to get this return.  Your portfolio had to look like the market, and you had to stay invested during good times and bad.  Simple . . . but not easy.

Could one of these events or pieces of data develop into something more significant?  Could we be on the verge of the long-predicted market correction?  Possibly.  There’s no shortage of talking heads willing to offer their opinion, but the fact is that none of them – let me say that again – NONE of them, know with certainty.  They’re offering an opinion.

Let’s assume for sake of argument, that some of them turn out to be right and we do experience a market downturn or correction.  That won’t be fun.  It never is.  It never has been in any of the instances where it’s occurred before.  But let me remind you of another commonality among all those earlier corrections, for whatever reason they may have occurred.  They ended.  Every single one of them.  And then markets eventually regained their previous highs and went on to new ones.

Could it be different this time?  I suppose it could.  Personally, though, I’m not betting against markets in the long run.  Just sayin’.


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