Tune Out Short-Term Noise

The top chart shows monthly returns of the S&P 500 over the past 10 years, and we can easily see how volatile they have been. Does that volatility instill fear or confidence?

The bottom chart shows the same data using annual returns and growth over time. If we lengthen out the time period and focus on the long term we can see the steady growth of the portfolio over time. The second chart helps to instill more confidence as short-term volatility is smoothed out. By focusing on the long-term, we help reduce fear from emotions and short-term market noise.