Nobody, Ever
Every single time the stock market goes through a down cycle, we forget how it felt during the last one. Or the time before that. Instead, THIS time feels like the end of the world. But be honest………if you feel that way now, you probably felt the exact same way all the previous times.
And it’s OK. It’s very human to feel concerned. Odds are pretty high that if you get noticeably concerned during down cycles, I recognized that long ago and strategically allocated some of your portfolio to things which are not stocks (for example, high grade bonds). That is one of the tactics I can employ to help protect you from your own fear and greed emotions.
Since 2009, the stock market (S&P 500) has experienced these 7 down cycles of greater than 10%:
2010 -14%
2011 -18%
2015 -13%
2017 -11%
2018 -18%
2020 -33%
2022 -12%
But even with all these down cycles, the stock market is up more than 700% since 2009. (source: Thomson, Inc.)
During each down cycle, it might feel tempting to sell all your stocks. Just “sit in cash ‘til things feel better”. But it is an insane strategy. Nobody has ever (nobody, ever) been able to move in and out of the markets repeatedly without chopping their money into little pieces.
You have to believe…
- That there exists a human being who has the ability to literally see the future
- And then you have to believe that human being is you.
As Warren Buffett said, “Investing is not a game where the guy with the 160 IQ beats the guy with the 130 IQ. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.”
As always, we are here to help you when you need us.
The views expressed herein are those of the author and do not necessarily reflect the views of Raymond James & Associates or its affiliates. All opinions are subject to change without notice. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Past performance is no guarantee of future results.
The Standard & Poor's 500 Index is a market capitalization weighted index of the 500 largest U.S. publicly traded companies by market value.
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The investments listed may not be suitable for all investors. Raymond James & Associates recommends that investors independently evaluate particular investments, and encourages investors to seek the advice of a financial advisor. The appropriateness of a particular investment will depend upon an investor's individual circumstances and objectives.
