The Market Downturn In Perspective
Whether you’ve navigated multiple downturns or this is your first, experiencing a steep stock market correction can be unnerving. In times like these, investors realize that successful investing isn’t merely about sound investing principles; true investing requires the virtue of patience and the ability to discern opportunity where most only see uncertainty.
Over the past twenty years, we’ve helped our investors weather dozens of downturns. After strong returns the last few years, we now face a turbulent 2022 with headwinds of inflation, politics, and global unrest.
Although circumstances may vary, the rules of successful investing always remain the same: (1) diversify broadly, (2) allocate properly, (3) rebalance consistently, and most importantly, (4) keep learning.
In that spirit, we offer you four simple investing tips. We hope they’ll provide counterbalance and perspective to the financial headlines.
Study history. It beats the news.
Long-term performance can be practically impossible to discern when markets are rapidly gyrating. However, like missing the forest for the trees, when we focus too narrowly on one year, we miss decades of market history that reveal a pattern of strong average returns.
Know your timeline. Compounding depends on it.
Making money and building wealth are not the same. One relies on luck, the other depends on consistent habits. Small, seemingly insignificant steps, such as paying the monthly mortgage payment or automatically contributing to an IRA, add up to extraordinary returns over the long-term.
Trust us. We’ve seen a recession or three.
Experience matters –especially when it comes to your money. For over twenty years, we’ve navigated recessions and negative headlines by setting clear expectations and building resilient portfolios that build wealth over the long-term.
While we don’t know how long this correction will last, we do know that markets anticipate the future. Therefore, in the same way markets have already priced in higher interest rates and the threat of a weakening economy, they will also anticipate falling rates and a stronger economy. This is why markets tend to recover so quickly and why timing these turnarounds is pure speculation.
In conclusion, our best advice is simple: stay invested, buy low if you can, and unplug from the daily financial news. In retrospect, every downturn is a limited opportunity…but it’s never easy in the moment.
As always, we appreciate your trust and support and are here to talk things through whenever you need.
1. NYU Stern School of Business, Stocks: S&P 500, Bonds: 10-Year Treasury Bond, Real Estate: Case-Shiller Index (residential). Past results are not a guarantee of future results.
2. Returns calculated by www.Financial-Calculators.com. This chart represents a hypothetical $25,000 investment in the S&P 500® Index, an unmanaged index of common stock performance with dividends reinvested. Past results are not a guarantee of future results.