Читать книгу More Straight Talk on Investing - John J. Brennan - Страница 30

When you follow the market's ups and downs on a regular basis, you allow the market to dictate your mood, so to speak. If you hear on the car radio or read on your daily newsfeed that the Dow Jones Industrial Average plunged 1,200 points, you are naturally inclined to calculate that you've lost money. If the market falls three days in a row and posts considerable losses, you may feel despondent. It might even compel you to check your balance. Don't!

This penchant for “mental math” can also play out over years. Suppose you had a $100,000 balance in your investment account at the end of 1994, as shown in Figure 2.2. Five years later, you are feeling pretty good with a balance of more than $350,000 in 1999. The market suddenly reverses and, at the end of 2002, your balance now stands at $219,000, and you figure that you've lost more than a third of your portfolio!

Only you haven't. These are paper losses. By 2006, your portfolio has recovered. To demonstrate how the market can quickly give and quickly take away in the short term, refer to Figure 2.2. As you can see, the value of your investment account is subject to euphoria-inducing gains and gut-wrenching losses over the short term. But over the long term, you are well rewarded for participating. (This example is for illustrative purposes and is based on $100,000 invested in the S&P 500 Index with dividends reinvested. Your portfolio is likely to include bonds and cash reserves that will offset the short-term losses incurred by stocks.)

Figure 2.2 Growth of $100,000 Invested in the U.S. Stock Market (1995–2019)

Sources: Vanguard, S&P