Since no one could have predicted this year’s historic market decline—nor the historic post-decline advance—we have to stick with what we can know and control.
Brief and colorful insights focused on major market trends.
Participating in the market’s gains while striving to limit losses on the downside is exactly what a well-diversified portfolio should aim to do—provide a smoother ride over the long term. Easier said than done.
Ten years may sound like “long term” investing, unless you’re talking about the 10 years ended September 30, 2019. Without the bear market of 2008-09 in your time frame, the view becomes incredibly rosy. A 20-year lookback provides much-needed perspective.
A picture is worth a thousand words. In each issue, we present one insight on a range of market, investment strategy, and behavioral topics. The 1000 Words Series is designed to provoke insightful and memorable conversations.
Investing may be simple, but it isn’t easy. We’re told to buy equities and hold them through good markets and bad. But few of us have the fortitude to calmly stay fully invested when prices are declining. When it comes to investing, your best offense is a great defense.
History has shown that double-digit losses in equities have tended to be followed by periods of above-average performance. Having already suffered the decline, investors may be well-advised to stick around for the recovery.
A globally diversified portfolio is important for those seeking strong investment performance. Diversification, however, is only effective when an investor is willing to own markets that have fallen “behind.”
Following the intense volatility of the great crisis in 2008-09, the bull market was mostly smooth sailing for a decade. The ebb and flow of volatility fits a broad historical pattern going back many decades. We do not know where the market will be tomorrow, next year, or next decade. Even so, investors should be respectful of long-standing market rhythms.