|
With stocks falling into
bear market territory, the last year has
been challenging for investors. But if
you're an experienced investor, a bear
market comes as no surprise.
You know that the stock market moves in
cycles and it doesn't go up indefinitely.
Yet, many investors say that “it's
different this time”— even though
history suggests
that it is not the case. Over the past 60
years, there have been ten bear markets,
including the current one, and they have all
looked surprisingly similar.1
 |
The
average bear market lasts 1.5 years. |
|
The
market, as measured by the S&P
500 Index,
drops by 33% on average. |
|
And,
on average, it takes 8.4 months
before
the market hits a bottom. |
Bear
market perspective
It's never easy to watch the value of your
investments drop. But getting out of the
market may mean missing out. Take a look at
the chart below:2
If you had invested
$100,000 in the stock market in 1972, as one
of the strongest bull markets in history
came to an end, you would have had only
$57,000 by the end of 1974. If you bailed
out to a savings account earning 5%, ten
years later you wouldn't even have recovered
your original investment. However, if you
had waited out the bear market, ten years
later your account would have been worth
just over $245,000. Of course, past
performance is no guarantee of future
results, but the stock market has offered
the strongest long-term returns for
investors who stay the course.
Reasons
for optimism
If you're looking for reasons to be
optimistic, consider these: History
generally
shows that the most difficult bear markets
have been followed by the strongest
rebounds. Down periods can often be good
buying opportunities. Bull markets
often start abruptly and last, on average,
three times longer than bear markets.
So here's what you can do now to make sure
you get the most from
your investments:
| 1 |
Stick
with stocks. The
longer you invest in stocks,
the better your chances to
earn a positive return. |
| 2 |
Diversify.
Diversification
can help smooth the highs
and lows of the market and
make
it easier to stay with your
long-term plan. |
| 3 |
Invest
regularly. Over
time, you'll buy fewer
shares when prices are up
and more when prices are
down. Regular investing
won't ensure a profit or
protect against a loss, but
over time it should result
in a lower average
cost per share. |
|
 |
Talk to your financial
professional about the investments in your
portfolio.
You hired a professional to help you weather
the bear markets, as well as to
celebrate the bull markets. There's never
been a better time to take advantage
of the knowledge and perspective your
financial professional can offer!
1 Source:
Bloomberg. Based on historic daily closing
values for the S&P 500 Index. The S&P
500 is an unmanaged index that includes 500
widely traded stocks. It is not possible to
invest directly in an index. Past performance
is no guarantee of future results.
2 Source: Lipper, Inc. The S&P 500 is an
unmanaged index that includes 500 widely
traded stocks. It is not possible to invest
directly in an index. Past performance is no
guarantee of future results. This illustration
does not reflect the performance of any John
Hancock fund.
|
