The Motley Fool

3 Quotes From Great Investors to Keep in Mind During a Market Downturn Like Now

At the time of writing, the Straits Times Index (SGX: ^STI) is down 1.2%, or 37 points, for the day to 3,014. Over the course of the year, the index has declined by 11%.

The market slump could continue into 2019. Therefore, to put things into the right perspective amid the volatile times, here are three pithy quotes by three great investors.

“A 10% decline in the market is fairly common—it happens about once a year. Investors who realize this are less likely to sell in a panic, and more likely to remain invested, benefitting from the wealth-building power of stocks.” – Christopher Davis

The current stock market decline might seem scary. However, we should also realise that such declines are healthy and are common. The key here is to stay the course by remaining vested in shares. Such market panics also provide an opportunity for long-term investors to load up stocks on the cheap.

“Your success in investing will depend in part on your character and guts and in part on your ability to realize, at the height of ebullience and the depth of despair alike, that this too, shall pass.” – Jack Bogle

During the Great Financial Crisis of 2007 to 2009, the local stock market dropped more than 50% in value from peak-to-trough. However, those who realised that “this too, shall pass” and had the guts to buy more great companies at low valuations would have made massive gains.

Therefore, as investors, we should embrace stock market volatility. It is only during those times that fantastic bargains will show up for us to build wealth over the long-term.

“People that think they can predict the short-term movement of the stock market — or listen to other people who talk about (timing the market) — they are making a big mistake.” – Warren Buffett

Market timing is futile.

A study by Index Fund Advisors showed that from 1994 to 2013, the S&P 500 index had generated an annual return of 9.2%. An initial investment of $10,000 would be worth $58,000 at the end of the 20 years. However, if an investor had missed out on just the 10 best days out of the time frame, the annual return would have fallen to 5.5%, meaning the ending amount from the same initial investment would be just $29,000.

So, what investors should do instead is not to time or forecast the market, but to focus his or her efforts on finding great companies to hold for the long-term, through market ups-and-downs.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.