Wednesday, 1 July 2015

Think twice before dumping your stocks because of Greece




When big shocks come along like the one ripping through Greece, many investors want to pull their cash from the market. But they usually end up regretting it.
Savvy investors use these market scares to scoop up more stocks at a discount.
Just look back at history. An S&P Capital IQ analysis of the last 70 years of market shocks -- including ones like the 2010 Flash Crash and Sept. 11 terror attacks -- shows that the U.S. stock market has a knack for weathering most storms that come its way.
The median S&P 500 decline the day after a shock to the system was 2.4%. That's pretty close to what happened on Monday when the market tumbled over 2% in response to Greece's failure to reach a new bailout deal with its creditors.
In the past, it took the stock market a median of just eight days to bottom out after a shock, according to S&P Capital IQ.
Fast recovery: In fact, the S&P 500 recovered all of that lost ground in a mere 14 calendar days. That's pretty reassuring to those worried about how a Greek default or exit of the eurozone may impact their portfolios.
"As history has shown, prior market shocks have usually proven to be better opportunities to buy than bail," Sam Stovall, chief investment strategist at S&P Capital IQ, wrote in a note to clients. 


This analysis by S&P Capital IQ shows how the U.S. stock market reacted to various shocks over the past 70 years.