“If it weren’t for the optimist the pessimist would never know how happy he isn’t” – Anon
By Alan Steel
August’s Stockmarket volatility was like a pessimist’s dream.
And the market bears reveled in it.
But here are a few facts to tempt your sentiment in the opposite direction.
It’s a fact that since the late 1800s, main Indices like the S&P and the FTSE All share fall by around 20% every three and a half years on average.
That cycle is about as natural as night following day.
And from my calculations we haven’t had a fall of that size since 2009.
Now, we did get a 15% plus fall in Autumn 2011, which brought out an army of negative soothsayers, or as they’re better known in the media “Renowned Experts.”
Want an example? Here’s what ‘thought provoking prophet’ Albert Edwards had to say in 2011:
“…stockmarkets are 50% to 60% overvalued and shares could fall by 70%”.
In fact, he’d predicted “an equities bloodbath” the previous year.
And in January 2012 he warned it would be “the final year of pain”, and that “China would collapse”.
Big Al’s Annual Negativity Fest
Back to the present and Big Al is saying he’s only “99.7% certain this is the end”. (That’s a follow up to last year’s: “Sell everything and run for your lives”).
Oh, and let’s not forget the message in 2013: “A massive market crash is on the horizon and Gold will climb” (double wrong on that one)…following 2012′s creative comeback of “…another Ice Age…” and “Expect the S&P 500 to decline below its March 2009 low…”, which was 666 back then.
So, where are we now?
Even after all these “volatile stockmarket” moments, it’s at 1,978 having fallen from the over 2100 mark it reached over the Summer.
Some collapse, eh?.
The Sky Is Falling…Again
Marc Faber is another of these media-loved “renowned experts”.
He’s consistently quoted predicting at least a 20% fall in stockmarkets, and for the last few years has recommended buying Gold.
You may have noticed Gold’s been dropping like a stone for 3 years or more.
Expect terrible things to be in the headlines.
And pay it no mind.
Why? Because over the last 70 years the S&P 500 (which contains most of the world’s world class big businesses) has risen, including reinvested dividends, some 1,000 fold.
Now think about what went wrong over all these years; like the twenty stockmarket crashes of 15% plus, fifteen of which exceeded 20%.
It still went up. Way way up…
You can’t fix stoopid…you can only change the channel.
So, knowing what you know now, how will you react to tomorrow’s negative headlines this time?