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If You Think a Big Loss is Painful

September 27, 2022

Withstanding the harshness and fears of a bear market is to understand history. If you think a big loss is painful, try missing out on a big gain. Markets have historically moved up more often than down and particularly immediately after the downturn. Being in the market at the beginning of a historical upswing is critical to your future performance.

Let’s look at history to demonstrate for years that the market was down more than 20%:

Ibbotson Associates SBBI Data, Ibbotson SBBI US Large Stock Index, 2022 Morningstar, Inc.

The market’s been a bumpy ride over time—but it’s gone up more often than down by a lot. When you look at the equity market, historically it has been a roller coaster. So, if you postpone investing until the market averages out, you might find yourself waiting a very long time. While the annualized return since inception on 12/31/1925 is 10.5%, the Ibbotson SBBI Us Large St stock Index only performed near that average six out of the last 96 years. More interesting is that it has delivered positive annual returns about 74% of the time. That’s 71 “up” years. And more than half of those 71 up years have returned gains of 20% or better. This again according to Morningstar, Inc 2022.

My point is that it takes a fair degree of resilience to withstand downturns but having patience by staying investing has some pretty remarkable rewards if you look at history. There is no guarantee that this will happen in the future, but I put my bets on history repeating. This is the principal reason I don’t try to time the markets.

My experience keeps me invested and helps me avoid the numerous pundits who steer an investor to make bad decisions. Hold tight and keep a death grip on your seat for this roller coaster is not far from the upturn. I just can’t tell you exactly when that will occur.

"This material is provided for general information and is subject to change without notice.  Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. The information does not represent, warrant or imply that services, strategies or methods of analysis offered can or will predict future results, identify market tops or bottoms or insulate investors from losses. Past performance is not a guarantee of future results.  Investors should always consult their financial advisor before acting on any information contained in this newsletter.  The information provided is for illustrative purposes only.  The opinions expressed are those of the author(s) and not necessarily those of Geneos Wealth Management, Inc."