Market downturns: should investors stay or go?

  Remember the beginning of 2016?

Investors might wish to forget.

The Dow Jones Industrial Average fell 11 percent to begin the year, falling as low as 15,660.18 on February 11.

Then, though, a funny thing happened.

The market started to recover. And by April’s end, the market had recovered those losses – and then some, rising 13.8 percent since the market low on February 11.

Plenty can — and will — change in the markets. This is not a piece suggesting the market will continue on this upward trend indefinitely.

However, the market volatility to begin 2016 does highlight the dangers of investors overreacting to downturns. Those that pulled their money out at the bottom in February may well have missed the gains that followed.

It’s only natural to be risk averse when the markets fall. According to Tim Maurer, the director of personal finance for Buckingham, market losses have double the emotional effect on investors compared to market gains, per cnbc.com.

In a down market, people could be tempted to leave the market or cut back on investing. For many investors, this may be the wrong move. If your employees are feeling a bit antsy, it may be time to stop dealing with emotions and start looking at the facts.

History suggests playing the long game is the best game for most investors when it comes to the stock market. As The Motley Fool notes, investors who have stayed in the market for at least 20 years in any two-decade period since 1871 have made money.

These statistics point to one thing only. Have faith and be patient. Whether you’re in Northbrook or Northville, the market always seems to come back.

For more information on the benefit of staying in the market, contact Plexus Financial Services at 847-307-6222, or visit their website at PlexusFs.com.

Disclaimer: Plexus Financial Services does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable; we cannot assure the accuracy or completeness of these materials.

Plexus Financial Services is located at 21805 Field Parkway, Suite 300, Deer Park, Illinois 60010. The company phone number is 847-307-6222.

Securities and advisory services offered through Plexus Financial Services LLC, member FINRA/ SIPC, a registered investment adviser. 

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