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www.insideHALTON.com | OAKVILLE BEAVER | Thursday, February 11, 2016 | 22 T Panic selling of stocks can be expensive for investors he best solution to endure stock market volatility is to put those normal market uctuations into perspective. That is the objective of today's column. This year, stock markets got off to a rocky start. Stocks in China fell seven per cent, which pointed stock values around the world in a downward direction. The American stock market, as measured by the S&P 500, had its worst ve-day start in its history. To say that stock markets are unpredictable is an understatement. An investment rm in the U.S. began its 2016 forecast by saying: "We have no idea." To be fair, everyone in the investment business has no idea about the short-term results of the stock market; however, very few will admit it publicly. Professor Jeremy Siegel's book, Stocks for the Long Run, studied valuations of stock markets since the beginning of stock markets. Dollars & Sense Guest Contributor Peter Watson Over time, stocks do well, but again; in the short term, they are unpredictable. Therefore, any investment strategy that includes holding stocks should be to hold those stocks for the long term. Guest contributor Peter Watson ABBEY ARMS GlEn ABBEY'S OnlY AuthEntic BRitiSh PuB! Join us every sunday live music, James anthony Band's "sunday sermon" 3:30pm ­ 7:00pm visit our weBsite abbeyarmspub.ca for upcoming events! 481 North Service Rd. @ 4th Line, Oakville 905-825-1109 www.abbeyarmspub.ca *With the purchase of an adults meal MOndAY niGhtS KidS EAt FREE His conclusion was that stocks are very predictable in the long term. Predictability of stock markets in the short term has remained elusive. Those who attempt to outsmart the market generally fail and we have given the details of that in many past columns. American nancial magazine Barron's had an interesting article, titled Bright Side to Stock Rout, in its Jan. 19 edition. It had some interesting information that will allow many investors to put short-term stock market losses in proper context. Referring back to 1926, the writer, John Kimelman, said: "In just about every year, the stock market experiences a signi cant downturn. Yet the long-term returns on stocks have been fantastic despite these periodic setbacks." If you had invested one dollar in the S&P 500 in 1926, that would be worth $5,386 at the end of 2015. That represents an annual return of about 10 per cent. In every ve-year period since 1926, returns have been positive 87 per cent of the time. Extend the holding period to 10 years and the results have been positive 94 per cent. There have been 28 times that the stock market declined on consecutive trading days where the value of the market declined by 10 per cent or more. Those markets did recover. During the 12 months following a 10-per cent decline, the average increase in value was 23 per cent. For those investors who sell in a panic, stock market recovery is of little bene t. see Time on p.23 Workers Untie! Brothers and Sisters! End the tyranny of lace-up work boots with Blundstone CSA Greenpatch! Stand up for new "memory" footbeds! More cushioned working conditions! On the ground support for workers'rights! And lefts! Striking kick-toe leather protection! Strength and lightness hand in hand! Unite! Untie! #164 The CSA Greenpatch in Crazy Horse Brown. Also available in Black and Stout Brown. $199.95