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This Puts the Recent Stock Market Volatility in Perspective

By Rachel Warren - Jan 13, 2022 at 6:50PM

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Here's what long-term investors need to focus on right now.

The market has kept investors on their toes lately. As a new year begins, some might be concerned about what the market could bring in 2022. In this segment of Backstage Pass, recorded on Dec. 22, Fool contributor Rachel Warren discusses the stock market's recently volatility, looks back on the its performance over the past several years, and discusses what investors can focus on right now to put these events in perspective. 

Rachel Warren: It's been a crazy several weeks for the stock market. The last few days, stocks have shown signs of rebounding, the market jumped higher for the last couple of days. I think it actually closed slightly up today. Something we like to do every time we start this show is look a little bit at the market's performance over the last few years.

It's really easy and it's quite natural to get caught up in the day-to-day movements of the stock market, and you're not alone if like me you've been seeing your portfolio take some significant day-to-day dips recently. It's totally understandable to not be happy with that and feel a little bit of emotion. That is why we're going to look at this chart real quick here.

You look at year to date, how is the stock market done? Well despite the kinds of crazy ups and downs we've been seeing, the stock market is still up and delivered a total return of nearly 26% just since the beginning of this year.

Let's go a little further back. We're long-term investors. We're investing in stocks for a minimum of three to five years, if not longer, often times 10 years, 20 years. You look back over the last three years, S&P 500 has delivered a total return of about a 100%.

You extend that out to a five-year period, 125%. What about 10 years? 356%. I think these numbers can be a really great way to put those day-to-day movements in perspective. 

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