The top five reasons to stay in the stock market

Currently all the major market averages are down by more than 20% from their highs set late last year. The market is officially in control of the bears. Many individual investors have a hard time getting through these times. Already I have been hearing some say that they think they are not going to be able to take it, and they are going to have to sell their stocks and go back to a safer investment option. I'll be the first to tell you that now is not the time to be getting out of the stock market. While things may look horrible now (they do), the long-term picture is still intact.

The Top Five Reasons to stay in the stock market

1. Panic selling never helped anyone- There is no doubt about the fact that when we get bear markets and recessions there is a lot of panic on Wall Street. It is often said that the single reason that many people fail in investing their own money is because they panic when the market is down. I've heard countless stories of individuals selling at very low prices, only to see the market recover over the long haul and do quite nicely. Panicking in the stock market is the kiss of death.

2. Remember all the past conflicts that the market has made it through- There have been dozens of major threats to the economy as well as the stock market over the years, and the stock market has always made it through them. Why would this be any different? We've had The Great Depression, September 11th 2001, the dot com bubble, numerous wars, and many other major threats. Sure the markets get hit hard, but they've always came back stronger than ever.

3. The long term returns are second to none- Sure you can find safer investment options, but chances are you won't find a better long term performer than stocks. Take a peak at this chart, which shows you the dates that major milestones have been hit for the Dow Jones Industrial Average. The chart shows beautifully a series of higher highs and higher lows. The long term average return for stocks is around 9%. There are no safe investment options that can net you that kind of return.

4. With higher risk comes higher reward- You knew this going in, or at least you should have. The bottom line is that owning stocks is more risky than most asset classes, but it also typically comes with greater rewards. Right now it's easy to forget the rewards part, but you shouldn't!

5. You haven't lost until you sell- Checking your portfolio statements can be extremely discouraging, but realize that unless you own options or futures, you haven't lost your money until you sell. This is simply the current market price if you were to sell, not an actual loss.

During the midst of a bear market it can be tempting to get out of stocks, but the wise investor will sit through it and realize that better days are ahead!