US Markets sold off last Friday June 10, due to hotter than expected inflation at 8.6% in May, stateside. All four major US indices have now clocked almost consecutive losing weeks, the likes not seen since the Great Depression in the 1930s (see Weekly charts from Tiger Desktop App below):
- Bellwether $S&P 500(.SPX)$ and tech-heavy $NASDAQ 100(NDX)$ clocked 9 losing weeks in the last 11 weeks
- Dow $DJIA(.DJI)$ fared the worst with 10 losing weeks in 11.
- Small cap $E-mini Russell 2000 - main 2203(RTYmain)$ performed better, but just, with 8 losing weeks out of 11.
All four major US Indices losing streaks. These useful 4 quadrants charts display is from Tiger Desktop App
We might be in for more selling or more volatile swings, until the FOMC meeting and Fed rate hike decision on Wed. If one has just started investing by going long in the past few months, there is a high chance one is taking losses.
The graphic below shows the percentage of time investors lose money is 39.3% to 37.1%, if the length of time invested is 1 to 3 months. However, as the time horizon gets longer, the percentage of time investors lose money gets smaller.
Time invested vs Investors Losing Money. Source: Investing
Let’s flip the percentages around to put a more positive outlook to things, as we have enough gloom in the past weeks:
- If one stays invested between 1 to 3 years, the odds of gaining money rise to 69.1 to 77.9%.
- If one could hold on to the investments by 5 to 10 years, the odds increase further, 80.5 to 88.5%.
- By staying invested for two decades in the stock markets, it is almost guarantee one would make money, 99.9%
Of course, the caveat is you are investing in fundamentally sound companies or ETFs that would not go bust.
So, if you are feeling the blues on this Monday the 13th evening, take heart, play the long game and your odds of winning increase over time. In current times, I am holding on to my ETFs tracking $S&P 500(.SPX)$, for the long term, maybe you would too?
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