Commentary – First Quarter 2022
May 26, 2022
Commentary – Second Quarter 2022
October 17, 2022Commentary – First Quarter 2022
May 26, 2022Commentary – Second Quarter 2022
October 17, 2022INSIGHTS
Staying the Course in Difficult Markets
If you have looked at your investment account or 401k recently, it might feel a little painful especially as of late. We wanted to share a couple of interesting statistics related to long-term market performance that might help alleviate the shock.
The Capital Group published recently a piece, “Keys to Prevailing Through Stock Market Declines” demonstrating the importance of staying fully invested in the face of the pain felt during market downturns.
Since 1951, the S&P 500 Index performance has shown (on average):
- Market declines of 5% or more happen about 3x per year and last 43 days
- Market declines of 20% or more happen about once every 6 years and last 370 days
Since 1929, of the five biggest declines (all greater than 45%) for the S&P 500 Index (on average):
- The first year following a major decline saw a return of close to 71%
- The third year following a major decline saw a return of close to 10%
- Over the five-year period following a market bottom returns averaged more than 23% on an annual basis
- A $10,000 investment at the market bottom ended the following five-year period with over $28,000
It is important to remain objective in the face of the market selloffs and volatility we have experienced so far in 2022. This begins with having a well crafted investment strategy, assuming market declines while accounting for a specific investor’s time horizon, to act as a roadmap for navigating these periods of market stress. Stay disciplined.
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