How to Handle Market Declines

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Concord Wealth Partners June 8th, 2022

Look at the Big Picture

Feeling nervous when the markets decline is an understandable and highly studied emotional reaction. When market cycles lower, as they have lately, perspective can help you overcome that emotion.

It’s important to recognize that market declines are a part of investing, and they happen frequently, as illustrated in the graph below. While past market performance is not indicative of future market performance, the decline of markets’ past has not lasted forever. In fact, each historical downturn was followed by a recovery and, eventually, a new market high.


Source: Capital Group, RIMES, Standard & Poor’s. As of 12/31/21.

Some investors tend to pull out of the markets when they decline. No one has a crystal ball that tells them the bottom or top of a market cycle. One of the biggest problems (among many other problems) with trying to time the market is, “When do you get back in?”

The graph below illustrates the results of missing some of the best days in the market compared to staying invested from 2012 through the end of last year. No one knows when the best ten days will happen, yet sometimes the best days occur during the early stages of the recovery before the recovery is recognized.


Source: RIMES, Standard & Poor’s. As of 12/31/21. Values in USD.

Our team has managed several market cycles and we’ve seen many ups and downs. When we created your financial plan and constructed your portfolio, we looked at your unique goals, time horizon, and risk profile. While we recognize and understand you may be nervous given the recent market declines, it’s important to stick to this plan to meet your long-term goals.

Please reach out if the markets have you feeling uncertain. You don’t have to go it alone; we are here to help you keep things in perspective.

The Concord Advisory Team

 

Investing involves risks, and investment decisions should be based on your goals, time horizon, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice. The market indexes discussed are unmanaged and generally represent their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. Please consult your financial professional for additional information. This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your situation.

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The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. Investment advisory services are offered through Concord Wealth Partners, an SEC Registered Investment Advisor.

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