Source: Fama/French Total US Market Research Index Returns, July 1926 – December 2021 (https://www.dimensional.com/us-en/insights/history-shows-that-stock-gains-can-add-up-after-big-declines)
It’s no surprise. When you open your monthly statements, almost all investments are down from their earlier 2022 highs. And unfortunately, no one can say when the stock and bond markets will recover.
But there is light at the end of the tunnel, and a good reason to stick to your investment strategy, which is usually the best advice for most people.
Interesting new research suggests that holding on and waiting it out pays off in the end.
Mercer Advisors Chief Investment Officer Donald Calcagni shares research showing markets have, at least historically, tended to recover within about 12 months of large market declines and rebounded to produce strong 1-year, 3-year and 5-year average gains (see graph).
The Takeaway: Sometimes the best strategy to surviving volatile markets is as simple as waiting them out. (Or in the words of legendary Vanguard founder Jack Bogle, “Don’t do something, stand there!”).
If you’re rattled by market uncertainty, remember that maintaining a long-term perspective and investing in a properly diversified portfolio is the best way to help make your money last and battle inflation over the decades ahead.
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