The stock market is a way to park your money into something that will grow over time. Many people are advised to put, at least some of, their money into the market so that it can grow over time. However, when the market has down days like it recently has had, it is difficult to tell someone to put their money at risk. Due to the fact that no one knows where the market is going, people are skeptical.
- When one looks at the stock big picture averages can lie because even distributions are rare in stock market returns.
- When there are market sell-offs 3%+ down days have been seen to tend to manifest themselves.
- Sell-offs are often called panics because our brains can be irrational when we are losing money.
“Volatility tends to cluster so it helps to see the other side of this one as well to see how often stocks were up 3% or more during market downturns. It turns out there have been 270 times stocks rose 3% or more on a single day since 1928, meaning it’s happened 3 times a year on average.”
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