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There Are Always Reasons Not to Invest

Staying invested in stocks despite negative news has historically been profitable.



Whether the headline comes from a newspaper or a push notification, there will always be negative news that will make investors wary. Looking back over the past 50 years, despite many reasons not to invest, staying the course ended up being profitable.  

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

 

Staying Invested Despite Negative News

1970 
Reasons not to invest
Stock Returns in 1970
Growth of $10,000:
1970-2019

US invades Cambodia 3.9%
$1,530,989
Vietnam War protests escalate
US recession
1980
Reasons not to invest
Stock Returns in 1980
Growth of $10,000:
1980-2019

Inflation is rampant: 13.5% 32.5% $867,369
Iranian hostage crisis
Cold War tensions
1990 
Reasons not to invest
Stock Returns in 1990
Growth of $10,000:
1990-2019

First Iraq War -3.1% $172,731
US recession
Lingering Cold War tensions
2000
Reasons not to invest
Stock Returns in 2000 Growth of $10,000:
2000-2019

Dot-com bubble bursts -9.1% $32,421
Energy prices spike
Bush vs. Gore election and recount
2010 
Reasons not to invest
Stock Returns in 2010 Growth of $10,000:
2010-2019

Lingering fears from the Great Recession 15.1% $35,666
Unemployment rate: 9.6%
Uncertainty about healthcare reform
2020
Reasons not to invest
Stock Returns in 2020 Growth of $10,000:
2020

Coronavirus outbreak ??? ???
Election year uncertainty
Tensions in the Middle East

Sources: Morningstar and Hartford Funds, 2/20. This table assumes an initial investment of $10,000 in stocks (represented by the S&P 500 Index) at the beginning of the period (January 1) and held through the end of the referenced period (December 31). Results will vary for other time periods and investment strategies. Assumes reinvestment of dividends and capital gains and no taxes or transaction costs. The S&P 500 Index is a market capitalization-weighted price index composed of 500 widely held common stocks. Past performance does not guarantee future results. The index is 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.1 Nevertheless, history suggests that participating in the market has paid off over time.

 

Your financial professional can help you create a plan so you can be a confident and disciplined investor.



1 Sources: Morningstar and Hartford Funds, 2/20

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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