The stock market hasn’t been a happy place so far in 2016. But for long-term investors, the real risk right now is losing sight of the big picture and making counter-productive short-term decisions.
So we’d like to provide some perspective on why a properly designed, long-term portfolio is still a good place to be. First, it’s worth pointing out that the market correction that we’ve seen in the past couple of months isn’t unusual. In fact, it’s pretty routine: Historically, market declines of at least 10% have occurred once a year.
Temporary declines are the market’s self-correcting mechanism, its way of “repricing” stocks, bonds and other investments that have become expensive relative to their fundamentals.