4 out of every 5 ____ have now fallen ____ percent.
On and on. It’s a parlor game. Maybe this kind of thing is helpful for context. Maybe it’s just rubbernecking. Whatever.
What’s really important is to remember that days like today are why we call them risk assets.
The S&P 500 historically provides you with a 7% average annual real return over the long term. That’s doubling your money roughly every 10 years.
But 7% average annual returns are not the same as 7% annual returns.
The word “average” appears in that statement. How are averages formed? By pinging violently back and forth between extremely varied numbers, such as +30% and -16% and +9% and -22% etc. In fact, you almost never get the long-run 7% on the nose in any given calendar year.
The asset class that has historically doubled your money every ten years is equally capable of making you feel like shit on the way there. Fortunately, never for very long.
Have a good weekend and pat yourself on the back. The pain of today is where the rewards of tomorrow originate from.
I’m a New York City-based financial advisor at Ritholtz Wealth Management LLC. I help people invest and manage portfolios for them. For disclosure information please see here.
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RT @ReformedBroker: Five Hundo
http://t.co/p5SIwpA2KE http://t.co/RmP4SfA9Xh
Five Hundo http://t.co/4wIm349G13
Good @ReformedBroker reminder as Dow falls 500+ “7% AVERAGE annual returns not the same as 7% ANNUAL returns.” http://t.co/z7uZg1h06r
RT @MichaelKitces: Good @ReformedBroker reminder as Dow falls 500+ “7% AVERAGE annual returns not the same as 7% ANNUAL returns.” http://t.…
Five Hundo http://t.co/IeF2NqNWuW
RT @MichaelKitces: Good @ReformedBroker reminder as Dow falls 500+ “7% AVERAGE annual returns not the same as 7% ANNUAL returns.” http://t.…
RT @MichaelKitces: Good @ReformedBroker reminder as Dow falls 500+ “7% AVERAGE annual returns not the same as 7% ANNUAL returns.” http://t.…
RT @MichaelKitces: Good @ReformedBroker reminder as Dow falls 500+ “7% AVERAGE annual returns not the same as 7% ANNUAL returns.” http://t.…
Five Hundo by @ReformedBroker http://t.co/LxQTTaTR6v “The pain of today is where the rewards of tomorrow originate from”
RT @MichaelKitces: Good @ReformedBroker reminder as Dow falls 500+ “7% AVERAGE annual returns not the same as 7% ANNUAL returns.” http://t.…
RT @MichaelKitces: Good @ReformedBroker reminder as Dow falls 500+ “7% AVERAGE annual returns not the same as 7% ANNUAL returns.” http://t.…
For those on west coast – turn off the news, grab a beer, maybe two, and read this by @ReformedBroker. Now. http://t.co/ud3sDuCCz8
RT @MichaelKitces: Good @ReformedBroker reminder as Dow falls 500+ “7% AVERAGE annual returns not the same as 7% ANNUAL returns.” http://t.…
RT @MichaelKitces: Good @ReformedBroker reminder as Dow falls 500+ “7% AVERAGE annual returns not the same as 7% ANNUAL returns.” http://t.…
RT @MichaelKitces: Good @ReformedBroker reminder as Dow falls 500+ “7% AVERAGE annual returns not the same as 7% ANNUAL returns.” http://t.…