As I’m writing, the market is down roughly 7% in three weeks. When the markets turn volatile and confusing, even the most patient investors may come to question the wisdom of the investment plan they are following.
Difficult markets come and go, but it’s important to remember that your plan and portfolio are long-term endeavors. Where the market is this week, or this year, is not nearly as important as where it will be in five, ten or twenty years. We’re much more interested in the businesses you own, than the daily stock market gyrations. We think Warren Buffett said it best:
“If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes. Put together a portfolio of companies whose aggregate earnings march upward over the years and so also will the portfolio’s market value.”
So how have America’s largest 500 companies done? Here’s a snapshot over the last 48 years in five years increments:
S&P Value Dividends per share Earnings per share
1970 90.05 $3.14 $5.13
1975 88.70 $3.68 $7.96
1980 133.50 $6.16 $14.82
1985 207.3 $7.90 $14.61
1990 328.75 $12.09 $21.34
1995 614.57 $13.79 $33.96
2000 1330.93 $16.27 $50.00
2005 1262.07 $22.22 $69.93
2010 1241.53 $22.73 $77.35
2015 2054.08 $43.39 $86.53
2018* 2716.68 $52.34 $162.00
Source from Robert Shiller www.econ.yale.edu
We all know that past performance is no guarantee of the future. But Windward believes owning small parts of wonderful companies is great way to build a long-term plan for an uncertain future. Our advice is turn down the noise and keep your eyes steadily on the horizon.
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