The stock market got you down?

We just have to keep our eyes on the horizon, and stay the course.

Kid with a brown paper bag on his head which has a sad face on it sits in front of an old style computer representing falling ASX 200 tech shares today.

Image source: Getty Images

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Waking up these days, I check my phone through my fingers.

What has the US market done overnight, and what's in store for the ASX?

This morning when I checked, the S&P 500 – America's premier share price index – was down 3.2%.

Ouch.

On one hand, it's the equivalent of ripping off a band-aid: at least we know what to expect, and it's over quickly.

On the other, it has the potential to ruin a day, even before you get out of bed!

Except it kinda feels like having a band-aid ripped off almost every day, recently, doesn't it?

Most of us feel a little punch drunk at the moment.

As I write this, the S&P/All Ordinaries Index (ASX: XAO) is down. Again.

It's draining, even for those of us who've been investing – privately and professionally – for well over two decades.

And that's important.

I have a cast iron stomach for market volatility. I do like the opportunity of buying more shares at lower prices.

But I'm not immune from the financial pain and emotional challenge of falling share prices.

It gets to us all.

There is no vaccination for this one. There's not even any real treatment.

We just have to grit our teeth and get through it.

The good news?

There's actually quite a bit.

First, we've been here before. Over and over and over. Market history is full of slumps, falls and crashes.

It's not new. It'll happen again. As I said, we've been here, before.

Second, that market history is pretty compelling: The Australian and US markets have never yet failed to recover from slumps, then go higher.

A guarantee? No. No-one knows the future.

But is it likely that more than a century of market history breaks down in 2022? No, I don't think so.

Or, to spin the question around: Isn't it likely that this slump is like the others before it – that we come out to new highs?

I think so, yes.

If that line of argument sounds familiar, that's because I was using it almost exactly two years ago, as investors worried about the impact of COVID on the ASX and international markets.

I did say we'd been here before, right?

Maybe that's cold comfort.

After all, a little history lesson doesn't cover the losses, does it?

And so, I'm going to go back to my favourite 'picture tells 1,000 words' investment chart – the 30-year graph, produced by Vanguard, of the returns of various asset classes..

Can you imagine how many times, over the past 30 years, shares have fallen?

Can you imagine how many dire headlines?

How many 'unprecedented' events, real and imagined?

How many times investors have worried about what might come next?

Let's do a quick, abbreviated roll call.

The last three decades started with a recession.

A few years later, we had the Asian Currency Crisis.

Fast forward (but not too far) and the dot.com boom imploded.

Then, soon after, there were the 9/11 attacks.

An investor, then, could have been excused for wondering if our way of life would change forever (sound familiar?).

The Bali bombing came next. Then the second Iraq War.

The GFC started soon after.

I'm going to stop, there.

That list barely covers the first half of the last 30 years.

(Plus, it's easier to remember what came next, including COVID and the first Australian recession in a long, long time.)

See, if I'd told you, in advance, all of the things that were going to rock the world over those three decades, you might well tell me I was crazy for risking my money in shares.

In anything, really.

You know the punchline, though, right?

A hypothetical $10,000 invested in Australian shares in mid-1991 had turned into more than $160,000 thirty years later.

Not in the absence of real and imagined economic and societal shocks.

But despite those things.

And those shocks had very real impacts on our markets!

The last 30 years isn't the story of uninterrupted gains, month-in and month-out.

It's the story of headlines, market booms and slumps (even a crash or three), uncertainty, fear, greed and everything else that goes with it.

And the ASX still managed an average 9.7%, per year, over that period, resulting in a 16 times return.

I can't be any clearer.

Investing works.

I don't blame you for worrying.

Losing money is an awful feeling.

Uncertainty is emotionally and sometimes physically draining.

There's no judgement from me.

But there is an exhortation.

Maybe it's different this time.

Maybe 2022 is the year that, for the first time in economic history, Australia's market hits a never-to-be-repeated high point.

But I very much doubt it.

Companies are innovating. Selling products and services.

Finding new ways to grow.

Being more productive.

Improving our lives.

And we get to share in the societal and economic upside – the first by living in this wonderful country, and the second by saving and investing a small portion of our earnings in the share market.

The cost? We have to live through volatility.

The reward?

Well, I reckon Australia's best days are ahead of us… and I think the same is true for the ASX.

We just have to keep our eyes on the horizon, and stay the course.

It's time to dig in.

Fool on!

Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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