Putting things in perspective

It's times like these that shake out the wimpy traders. I'd be wimpy too if I was just starting out. I'm down over 15% now. That hurts. It's the most I've ever been down.

But if I go back in time, I can see that since I started trading in March of 2003 (blue arrow) this is the most that the market has struggled (indicated by the percent of stocks above their 200 day moving average). So I should expect to be down (and so should you unless you're some sort of genius).

Looking back, it would have been nice to be able to predict this decline. I should have stayed in cash. Maybe someday I'll be knowledgeable enough to time the market correctly. Right now, I don't have a clue.

The key (for me at least) is to remain committed to a trading plan that I know blows away every mutual fund and index out there. It's easy for me to question my sanity when things aren't going my way. The best thing I can do is to put things into perspective and avoid the emotional turmoil that rough times in the market create.

Here's some perspective:

1) I'm still performing better than the NASDAQ which is down 15.77% YTD.
2) The indexes have given up most (NASDAQ) or all (S&P 500) of their gains from last year. I've given up half of mine so far.
3) I'm young and relatively inexperienced when it comes to the stock market. I have a lot to learn and a long time to do it.
4) I've never lost money over a year's time.
5) According to AAII, the Zweig screen held month to month since 1997 has NEVER lost money in a year's time. In 2002 it still managed to gain 16.9%. The average yearly gain since 1998 for the Zweig screen is 42%!

So, don't get all bummed out about a couple of lousy months! (I need this kind of perspective more than anyone!)