When markets are jumpy, maintain focus on your goals
After a long spell of positive returns, it can come as a tremendous shock to be reminded that volatility includes stock prices going down as well as up. The truth is, such movement is practically guaranteed.
While you can’t control the markets, you can manage how you react to their swings. The key is to zoom out from any particular period and focus on the long-term trend. As you can see in the chart below, the Standard & Poor’s 500 Index, widely used as a proxy for the U.S. stock market, has been one long succession of volatile periods. However, despite the historical volatility, the index increased nearly 19 times in value during the period shown. Investors who jumped ship during the volatile times, by selling their stock portfolios, would have missed out on the impressive gains that followed the declines.