The Dow Jones Industrial Average tumbled 545.91 points, or 2.1%, to 25,052.83, bringing the Wednesday, Thursday decline to 1,378 points. The average correction lasts 51 trading sessions according to the data, although more recent corrections have proven to be more short lived. February’s lasted 13 days. The last five corrections have only lasted an average of 37 trading days, while going back to 1980, the average length has been 44 sessions. Since 1950, the average lasted 61 trading days (WSJ Market Data Group).
My reason for pointing out some of the above statistics is to help people understand that when you begin to do analytics on your own personal portfolio, over a period of years, you will quickly see that if you had missed being invested just a few days out of those years you would have not done very well. When we look back on our portfolio we quickly come to the understanding that it is impossible to time the market, impossible to understand what could happen in the next day, let alone next month. The only answer is to stay the course. Don’t make any attempt to get in and out. This is why I am so adamant about staying in. I know that the majority of you, because of your human nature, react by getting out.
On a conference call back in January or early February I changed my strategy for our partners. Many of our partners have been taking advantage of that strategy so they have suffered less than others over the last couple of days. You will notice that this strategy did not include getting totally out of the market and parking your money temporarily in a money market account. My goal is simply to hedge against what I believe was likely to happen this year and by the grace of God, I got this right again. This week's decline, along with the February and March downturn, and even many previous recessions, illustrates the reason you need to be convicted about what you’re doing and understand why you are investing the way you are so you will stay in during these difficult downturns.
We only have to look back to 2008 to understand that had we gotten out of the markets in 2008 -- and many people did -- you would not have done very well by parking your money in a CD. If you stayed tough during those rough months of 2008 and 2009, you have done extremely well in the past 10 years. I am not suggesting that we are going through anything like 2008. I don’t believe that is the case. I am merely trying to point out the merits of believing in your strategy and staying true to what you believe in, even if we were to see a recession.
The one big difference from 2008, and in any future recessions, is we have to consider the political ramifications of a recession. In this political climate, it could be that some are searching to undermine our economy by promoting mob rule, bankrupting our moral values and promoting a socialist agenda – or worse, making us wish we had socialism. The upside is we now know because of the election two years ago that we have the power to make sure that our republic stays on course and our portfolios and economy stay intact. I’m talking about next month’s election and in every future election. We MUST be engaged for our families and future generations like never before. It’s one thing to save America. It’s quite another to keep it. For now, we are trusting our strategy and trusting in God’s promises for those who honor him. Let’s make sure we put our God-given feet, faith and fight to that trust. Let’s keep our republic.
Dan Celia is president and CEO of Financial Issues Stewardship Ministries, Inc., and host of the nationally syndicated radio and television program “Financial Issues,” heard daily on more than 650 stations across the country and reaching millions of households on several TV networks. Visit www.financialissues.org.