The Nasdaq is down approximately 70 percent since last March, the worst correction any of us have ever seen. Human nature is to panic and sell everything. However, in today's volatile environment, patience is more important than ever. The stock market's long history has had many painful declines. Yet it has always rewarded patient investors.
Nobody enjoys economic slowdowns, but their impact on long-term investors has been minimal.
Most investors make their biggest mistakes trying to time the market to avoid those negative periods. The difference was most investors tried to time the market and got in at the peaks and out at the troughs. Capital Research conducted a similar study comparing two hypothetical investors in the Dow Jones Industrial Average from 1974 to 1994. The lucky one averaged 15 percent annually, while the unlucky one earned 13 percent annually. Both fared better than the average investor studied by Dalbar.