Investing in bear markets can be scary. Anxiety, concern, and fear are normal to feel. Negative outlooks often accompany bear markets, such as increasing inflation, interest rates, and possibility of a recession.
Investors may be tempted to sell their investments and transform a temporary market selloff into a permanent loss for their portfolio. At times like these, maintaining the right perspective is crucial.
Maintain a Disciplined Perspective
Warren Buffett is full of wise advice and perspectives. The following perspective is especially timely:
“The market is a device for transferring money from the impatient to the patient.”
That is what is happening right now. And historically patient investors have been well rewarded.
For instance, since the pandemic hit, markets have returned 44%. That includes the 35% Corona Crash and the current bear market losses to date (over 20%).
What about the three-year Global Financial Crisis (GFC)? Stock investors who endured the GFC saw their portfolios drop over 50% as governments and economies worked through the crises. But through September of this year investors that hung in there have earned 221%, or 8.1% annualized. That is a pretty good return given that they lost half of their portfolio value in the GFC, 35% during the Corona Crash, and over 20% in this year’s bear market.1
Developing Patience
Patience is both a virtue and one of the greatest skills investors can develop. The challenge is that patience can deplete over time. If you feel your patience dwindling, let’s talk about perspectives and strategies that can help you refuel your tank, and perhaps take advantage of everyone else’s fear.
– Jonathan
CRN202512-3187340
1. S&P 500 Index returns through Sept 23, 2022 and include reinvestment of dividends. Performance calculated at https://dqydj.com/sp-500-return-calculator/. Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. All indices are unmanaged and may not be invested into directly.