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Surviving a Bear Market

| October 28, 2022
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The current economic environment is most certainly testing the discipline of even the savviest of investors. There is currently a lot in play that can justifiably make any investor worried. Some investors panic and jump ship during choppy waters, and some ride it out and wait for calmer waters. Which mindset do you have?

The term “bear market” can sound scary. However, let’s take a look at some facts about bear markets that may help put things in perspective for you:

Bear markets are normal. As I have mentioned, market downturns are uncomfortable, but not uncommon. Since its inception in the late 1920s, the modern S&P 500 has seen 26 bear markets. Keep in mind that there have also been 27 bull markets. During these bear markets, stocks on average lost 36%. However, stocks have gained an average of 114% during the bull markets, thus rewarding long-term investors.*

The long-term average frequency between bear markets is 3.6 years. This means an investor could see about 14 bear markets in a 50-year investment window. Since 1930, the market has been bearish for a total time-period equal to 20.6 years. This means that stocks have been on the rise the other 71.4 years!* 

Bear markets last for significantly less time than bull markets. Bears last on average 9.6 months to 2.7 years on average for bulls.*

*Source: cnbc.com; 6/13/22

Investors have seen multiple record highs over the last few years in the stock market. At some point, a market correction or larger downturn for equity markets was inevitable. Please remember, a normal part of investing is experiencing the ups and downs of the market.

The Cornerstone Investment Committee feels that volatility isn’t likely to go away in the coming months, so investors need to be prepared. However, remember, if you have a well-diversified, long-term financial plan, abandoning ship is more than likely not in your best interest. Not reacting to the news headlines, keeping perspective on market fluctuations, and focusing on your long-term goals can help you stay on course toward your financial objectives.

These are challenging times and I want you to be comfortable knowing that our financial planning team is staying on top of any situations that may affect you. Having a proactive approach to your financial goals and a solid investment strategy is part of The Cornerstone Experience®.

Any opinions are those of Jill Mollner and not necessarily those of Raymond James. This content is for general information only and is not intended to provide specific advice, an endorsement, or recommendations for any individual. Raymond James Financial Advisors do not render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.Past performance is no guarantee of future results. Investing involves risk, including possible loss of principal. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Holding stocks for the long-term does not insure a profitable outcome. Investing in stocks always involves risk, including the possibility of losing one's entire investment. No strategy assures success or protects against loss. To determine what is appropriate for you, consult a qualified professional.

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