The current market volatility is giving rise to fear from investors who have benefited from the unprecedented growth we’ve had over the past few years! Having very little experience of falls in the market, particularly falls that last longer than a few months, it is easy to see why the downward trend in assets could appear unsettling.
Many investors move to cash to try and avoid ‘losing’. Once the market bounces back, they then try to buy back in to try and ‘win’.
However, they don’t realise that by trying to time the markets- they are likely losing out!
On average, half of the total bull market returns occur in the first year following a bear market.
That bounce back from recessionary lows to the start of a new cycle happens violently and quickly, see March 2020 for details.
Below is a great chart that shows bull and bear markets going back to the Second World War.
Neither good times, nor bad times last forever, and in fact the good times (bull) tend to be longer than the bad (bear).
Missing out on that initial period of gain can be catastrophic and highly destructive.
Our clients are invested for the ups, which also means accepting that they’ll be invested for the downs. We can help them to mitigate the impact of the down, but these cannot be avoided entirely, as that’ll guarantee a lower return in the longer term.
Speak to an adviser to better understand your investments.