Making the best of the on-going correction: This is a brief note to apprise you of the on-going correction in the stock market and how to make the best of this situation.
Corrections that are guaranteed: We have often told investors that stock market corrections are guaranteed to happen. What should not be lost is that they also provide wonderful buying opportunities in retrospect. This correction is the same.
A picture worth millions: We include our favorite picture – the long term total return from large companies over the last 90 years encompassing different Presidents, economic cycles, wars, depressions etc. – how $1 today is worth $ 6,034 today. In most ten-year periods, the stock market has provided a return that exceeded returns from other asset classes and we see no reason why it wont be the same in the future. All that was needed was a long-term approach, patience, an ethic of saving and investing and millions could have been made!!!
The stock market is NOT a black box: Though relatively unpredictable in the short and intermediate run, the stock market is NOT a black box. It is comprised of businesses that are often global and benefit from global expansion. These businesses have tangible earnings and their earnings yield of 6.1 % is much greater than in the fixed income market and cash market.
Our advice – add to your holdings: We would like to point out to you that the earnings yield on the stock market far exceeds the bond market and what is available at the bank. As such, those who buy into the current dip are likely to do well over the years to come. We strongly advise you to add to your holdings Let us know if you would like to discuss any of the above.