Given today's negative mood, clients are predisposed to believe even the most dire accounts of historical performance by the stock market.Among the common myths about investing in the stock market are that investors made no money in the market from the mid 60s to early 80s and that It took 25 years for the market to recover to the level reached in 1929.

There's only one way for advisors to combat these - and that's by presenting the true facts. An article in the November 25 issue of the Globe and Mail presented the real story regarding long term performance of the stock market:

http://www.theglobeandmail.com/partners/free/globeinvestor/investment/nov08/online/justfacts.html

Dealing with market myths requires advisors to beef up their knowledge of historical performance and add resources with detailed data to their library.

For advisors looking for this information, the Ibbotson Stocks, Bonds, Bills and Inflation yearbook - available for purchase on Morningstar's website -contains all the historical data you could want and makes for fascinating reading; it's the best investment of $150 many advisors who are committed to professional advice can make this year.

None of this is intended to say that stocks will always be a safe or pleasant haven for investors. And despite the overwhelmingly positive returns that long term investors in U.S. stocks have seen across virtually every time frame, there is always the possibility that it could be different going forward.

Just remember, though, the only guide we have going forward is what happened in the past. And in looking at the past, we need to look at all the facts - not just those selected by people looking to grab newspaper headlines.

There are three key takeaways for advisors.

1. It's fine to express doubt to clients about negative claims in the media, but being skeptical isn't enough unless you're able to provide hard data to offset these.
2. Ensure you don't fall into the trap of using narrow indexes and excluding dividends. The only thing that matters to investors is total return - and that's the only thing you should talk about. Remember, whenever clients or industry analysts are talking about the Dow Jones or the S&P TSX, these almost always exclude dividends.
3. Unless you have a solid knowledge of the facts yourself, you will be unable to combat some of the distortions your clients will be exposed to. Invest the time to ramp up your understanding of history to be a better resource to clients.