I hate to sound like a bobble-head Wall Street dude, but I'm just not too worried about this market drop. In fact, I think dividend investors, particularly those of you participating in DRIPs and other dollar-cost averaging strategies should feel just fine.
Consider this study that I originally did for my book, The Standard and Poor's Guide for the New Investor ...
Assume for a moment that it was possible to buy an index fund of the Dow back in the 1930s. And pretend that you began investing $100 into that index fund every month, starting on October 31, 1929. You continue this strategy for the next decade.
Well, at the end of 10 years, the Dow is DOWN 46%. That's one of the worst periods for stocks you can possibly imagine. However, over the same time, your overall investment is actually UP 5%!
How can that be? Because you were buying equal dollar amounts throughout the turmoil. And that means you were getting more of the index when it was low, and less when it was high. You were making friends with the volatility!
So, sit back and relax. Keep saving and investing. Plow your dividends back into more shares. And come back and check in with me ten years from now, dude.
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