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Client Conversations: Say Yes to Investing

January 2019

Continuing to participate in the market during turbulent times has been beneficial to investors, historically.

Client Conversations gives financial advisors an easy way to communicate with clients on topics influencing financial markets; it highlights common investor behaviors and offers ways to address the challenges investors face. Share this article with your clients, and remember to follow your firm's policies that govern sharing content with clients and prospects.


Whether the headline came from the paper boy or a push notification, there has always been (and will always be) negative news that may make investors wary. Looking back over the past 50 years, despite reasons not to invest, staying the course has historically been profitable.

The table below outlines standout news events from each year ending in nine in the last half-century. Even though the reasons not to invest were compelling, disciplined investors who tuned out the noise were rewarded.


Investing through negative news

 

1969
Reasons not to invest
S&P 5001 Index Returns 
1/1/69 – 12/31/69
S&P 500 Index
Growth of $10k 
1/1/69 – 12/31/18
Recession begins in December -8.40%
$1,066,522
Strong anti-Vietnam War sentiment
Deep divisions over Civil Rights
1979
Reasons not to invest
S&P 500 Index Returns
1/1/79 – 12/31/79
S&P 500 Index
Growth of $10k
1/1/79 – 12/31/18
Inflation is rampant: 11.35% 18.45% $781,359
Iranian hostage crisis
Three Mile Island accident
1989
Reasons not to invest
S&P 500 Index Returns 
1/1/89 – 12/31/89
S&P 500 Index
Growth of $10k
1/1/89 – 12/31/18
Lingering Cold War tensions 31.69% $172,993
Friday the 13th “Mini-Crash”
Japan’s stock market crashes
1999
Reasons not to invest
S&P 500 Index Returns 
1/1/99 – 12/31/99
S&P 500 Index
Growth of $10k
1/1/99 – 12/31/18
Y2K panic 21.04% $29,846
Fears of a dot-com bubble
Impeachment trial of Bill Clinton
2009
Reasons not to invest
S&P 500 Index Returns 
1/1/09 – 12/31/09
S&P 500 Index
Growth of $10k
1/1/09 – 12/31/18
Global Financial Crisis continues 24.46% $34,303
Unemployment rises to 10%
Uncertainty about healthcare reform
2019
Reasons not to invest
S&P 500 Index Returns
1/1/19 – 12/31/19
S&P 500 Index
Growth of $10k
1/1/19 – 12/31/19
Ongoing trade war with China ??? ???
Political dysfunction
Market volatility rising

Source: Morningstar and Hartford Funds 1/19. This table assumes an initial investment of $10,000 in stocks (represented by the S&P 500 Index) at the beginning of the period and held through the end of the referenced period. Results will vary for other time periods and investment strategies. Assumes reinvestment of dividends and capital gains and no taxes or transaction costs. Indices are unmanaged and not available for direct investment. For illustrative purposes only.

 

Investing is a long-term endeavor. There will be years such as 2008 when the S&P 500 Index dropped 37%, which turned a $10,000 investment at the start of the year into $6,300 by the end of the year.2 Nevertheless, history suggests that participating in the market has paid off over time.

 

Your financial advisor can help you create a plan so you can be confident in times of market tranquility and turbulence.

Client Conversations gives financial advisors an easy way to communicate with clients on topics influencing financial markets; it highlights common investor behaviors and offers ways to address the challenges investors face. Share this article with your clients, and remember to follow your firm's policies that govern sharing content with clients and prospects.


1 S&P 500 Index is a market capitalization-weighted price index composed of 500 widely held common stocks. The index is unmanaged and not available for direct investment. Past performance is not indicative of future results.

2 Sources: Morningstar and Hartford Funds, 1/19

Investing involves risk, including the possible loss of principal. Individual investor’s circumstances may vary. Before investing, consider your personal goals, risk tolerance, and time horizon. While diversification does not ensure a profit or protect against a loss in a declining market, it may be prudent to diversify among equity and fixed-income investments.

This material is provided for educational purposes only.

 

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