Dow Jones over time - interesting illustration
If you have been investing for some time - even it has just been in KiwiSaver, you will know that markets go up and down in value depending on market events, but over time they do increase. This is one of the things that we spend quite a bit of time talking to our clients (particularly newer ones) when markets go down.
The human reaction when markets go down and you can't seem to see the upturn, is to pull all your funds out (which is the wrong thing to do if you are a long term investor, and if you are a short term investor - ie less than 5 years, you shouldn't be invested in equity markets). Sometimes it does get hard to stick at it and know that things will work out in the end (eg during the Global Financial Crisis from 2008 - 2012). The recent Covid Crisis was a shock downturn then an almost as shocking - well surprising upturn.
The global reference point for what markets are doing and have done is the Dow Jones Industrial Average (DJIA). It is important to remember that this index only covers 30 stocks, but the are the biggest stocks in the USA and during the 20th Century this more or less meant in the world, so it is still a good indicator.
This video shows the value of the DJIA over time. The shares included in the DJIA have changed over time, as the world changed, General Electric is no longer there, but Apple and Amazon are. Enjoy the watch. Click on the picture below to watch the video.
