Disregard the Dow—and the Dog—to Stay Focused on the Long Term

Imagine a network news anchor in navy suit and perfectly coifed hair, announcing his or her usual gravitas, "Turning to Wall Street, the Dow plummeted over 600 points today, one of the biggest drops in history," as the feed cuts to B-roll footage of Wall Street traders with furrowed brows looking very glum and then a graphic with a big bright red arrow pointing down. Does this kind of news make your pulse quicken? Does it shake your confidence? Well, we think this story, which is happening more frequently these days, needs more context. 


In this report, you will learn:
  • Why the Dow doesn't make a good proxy for U.S. stocks, in our opinion
  • How Dow point drops can be misleading and why percentage declines (or rises) matter more
  • Why long-term investors should tune out daily returns and stay focused on their progress towards long-term goals

Morningstar Investment Management LLC is a registered investment adviser and subsidiary of Morningstar, Inc. The Morningstar name and logo are registered marks of Morningstar, Inc. Opinions expressed are subject to change without notice. Morningstar Investment Management shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, the information, data, analyses or opinions or their use. This commentary is for informational purposes only. The information, data, analyses, and opinions presented herein do not constitute investment advice, are provided solely for informational purposes and therefore are not an offer to buy or sell a security. Before making any investment decision, please consider consulting a financial or tax professional regarding your unique situation.

 

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