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Everyday millions of investors check their favorite stock market website to see what the stock indexes do. For example, on any given investing site an investor can check how the S&P500, the TSX, the FTSE, or the DJIA averages are faring for the day. I find I have been doing this a lot more than normal lately given the crazy seesaw ride the markets have been providing us. However, as a long-term dividend investor this is not ideal. I find that looking at these numbers every day stirs up unwelcome feelings to act, such as sell stocks that are crashing. I have said it a million times – emotions are the enemy of the investor and we need to do something to stop them.[ad#tdg-embedded]
To help myself combat my own feelings, I did a bit of research and found some data over at a site dedicated to the Dow Jones indexes. I know, I know, the DJIA is not the best index to use but it has one thing it has going for it is that there is over 100 years of data on the index. I found this data and produced a chart that shows the profile of the Dow over since 1896 – yes that reads 1896. Here is what it looks like
Click to EnlargeThe key message I took from this chart is this – over long periods of time the stock market goes up. The markets go up and down from time to time (kind of like now) but over the long term eventually recovers and goes higher. I know that past performance is not a predictor of future performance, but it is really all we have and lets face it 113 years of data is a pretty good period of time to work with.
This chart brought my emotions in check. I am still evaluating if some of my stocks still belong in my portfolio, but I am basing decisions based on facts and not on emotion.