Sell Everything?

With the US stock market down over 7% already in 2016*, many are questioning if the bull run is over.  There have been a number of articles written over the last few weeks that mention the “R” word (recession).  Also, the “world is coming to an end” crowd is out in full force – often advising individuals to sell out of stocks ahead of a 2008 style economic collapse.

While sorting through all the negativity this weekend, I came across the article below.  The article suggests that staying invested (versus going to cash) may work out to your benefit over a reasonable investment time frame.  The article states that even if you had perfect foresight and went to cash before every 20% market correction over the last 90 years – a buy and hold portfolio would have significantly out-performed your portfolio.  Why?  Simply put, stocks pay dividends and those reinvested dividends buy more and more stock when the market is down.  This is a very powerful mechanism that works to your benefit when the market eventually bounces back.  Food for thought.

*Return numbers are from Past performance does not guarantee future results.