One of the hardest things about being a long-term investor is that there are always going to be reasons to sell. Since fear itself sells, there will be a headline somewhere that poo-poos investing in the stock market. If you are waiting for a year of nothing but good news to justify being invested, you’re going to wait a long time. Like, maybe forever.
Michael Batnick’s excellent chart showing “Reasons to Sell” between March of 2009 thru June of 2020 puts this in perspective.1
There have been plenty of other grounds for bailing on the stock market since this chart: the run up to the presidential election of 2020, the storming of the US Capitol in January of 2021, and inflation fears later in the first quarter of this year. If you were looking for a reason to get out of the stock market, you probably found one.
This is nothing new. For example, when I arrived on this planet the S&P 500 was around 100, and there have been many reasons to sell along the way. (Did you?) Here are some of them:
Exxon Valdez oil spill
Increasing trade deficits
Oklahoma City bombing
9/11 terrorist attacks
Global financial crisis
Here’s the kicker: The S&P 500 is now thousands of points above where it was through those decades. Thus far, on a long-term basis, it’s been relatively resilient.
Admittedly, this does not mean you should never sell. There are a variety of reasons to do so. Too many times though, investment decisions can be driven by guessing how the stock market might respond to an external event, instead of being shaped by how events in your own life effect your overall financial plan. Focus more on investment planning for the “headlines” of the lives of you and your family (like retirement, family, death, etc.) than predicting how headlines might affect the stock market. Make sure your reason to sell (or buy!) is a prudent one.