By Karen McClintock, CFA
August 8, 2022
#1 – Keeping Things in Perspective
2022 has been a uniquely volatile year – stocks and bonds are both down for only the second time in current history. I want to share some historical content about the markets to help you navigate this volatility and keep things in perspective.
To start, I offer the table below. This table illustrates stock market outperformance (in green) 12 months following past bear markets (in red). I believe the lesson here is to stay invested!
#2 – Don’t Risk Missing the Market’s Best Days
For our second reminder to “stay invested,” we look at the impact of investors pulling their money out – even for a short time. If investors miss just the best five return days over the lifetime of their investments, it could have a meaningful impact on their returns. We believe you should think long-term and stay invested through the market’s ups and downs to give yourself a better chance to reach your long-term goals.
#3 – Low and Rising Interest Rate Environment
Our third reminder to “stay invested” asks the question, “Is it possible to make money when interest rates are rising?” While past performance is not an indication of future results, it is heartening to note how investments performed during the last cycle of low and rising interest rates. We believe you should think long-term and stay invested through the market’s ups and downs to give yourself a better chance to reach your long-term goals.
#4 – Diversified Portfolio Has Done Well in the Long-Term
Our fourth reminder to “stay invested” shows that a global balanced portfolio of equities and bonds has not produced a negative return over any five-year rolling period since 1979. Although there are no guarantees the future will resemble the past, history tends to favor long-term investors. We believe you should think long-term and stay invested through the market’s ups and downs to give yourself a better chance to reach your long-term goals.
Disclosures
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