Do You Have Time To Wait For Stocks To Recover?

It's March 2023 and we're smack dab in the middle of a Bear Market.

What should you do with your investments?

Should you do anything?

Do you have time for them to recover?

Let's talk about that for a minute.

What is a Bear Market?

What exactly is a Bear market? A Bear market simply stated is a condition when security prices fall by 20% or more from recent highs. A Bear market is typically accompanied by high pessimism and negative investor sentiment. Bear markets also may accompany general economic downturns such as a recession. Sounds terrible doesn't it? Let's see what history has had to say about Bear markets.

Since 1948, there have been 11 Bear markets U.S. excluding the one we are in right now. The average number of years from the peak of the Bear market to the recovery, meaning the time it took for the S&P 500 to climb back to its previous highs was 3.9 years and the median/midpoint was 2.7 years. On five of those occasions, the market recovered in 2 years or less! In other words, market downturns feel much longer than they actually are.

Since 1948, there have been 11 Bear markets U.S. excluding the one we are in right now. The average number of years from the peak of the Bear market to the recovery, meaning the time it took for the S&P 500 to climb back to its previous highs was 3.9 years and the median/midpoint was 2.7 years. On five of those occasions, the market recovered in 2 years or less! In other words, market downturns feel much longer than they actually are.

So back to the original question. Do you have time to wait for stocks to recover? If history is any guide, the answer is yes you do. So....

What should I do while I wait for stocks to recover?

Market downturns tend to provoke extreme reactions and make us feel out of control which leads to the feeling that we must do something and we must do it right now. But should we do anything?

One thing you could do is re-balance your portfolio? Maybe now is the perfect time to actually buy some of the stocks that have been beaten down in the last few months because of this Bear Market. Sounds counter intuitive right? However, you can buy more shares with your money now than you could two months ago. If you are unsure what to do here or how to do it, feel free to contact us to see if this is something that might be advantageous for you and your portfolio.

Another thing you could do is nothing. That's right don't do anything at all. When markets are in turmoil like this never underestimate the value of doing nothing. Sometime it's a great idea to sit and think. Sometimes it's a better idea to just sit.

Another thing you could do is nothing. That's right don't do anything at all. When markets are in turmoil like this never underestimate the value of doing nothing. Sometime it's a great idea to sit and think. Sometimes it's a better idea to just sit.

At 80/20 Financial, we can help you plan your retirement. We are retirement planning specialists. We will never promise you that we can beat the market, but we can help you not to get beaten by the market.

If you would like a second opinion on your current retirement strategy please contact us. We would be honored to work with you.

You Need A Plan

Bear markets can cause extreme anxiety to a retiree or potential retiree. That's a beauty of retirement planning. We know for a fact Bear Markets are coming and will continue to come so we plan for them.

When you plan for something you know is coming then you are prepared when it eventually comes.

When you DO NOT plan for something you know is coming then that's when anxiety and panic happen.

No one makes good decisions in emotional states such as anxiety and panic.

Proper retirement planning removes the anxiety and panic.

At 80/20 financial services we believe in making a goal-focused, long-term retirement plan and sticking to it and only adjusting when necessary. We act, we don't react.

For more articles about retirement planning and investing, click here.

Thanks for reading!

Brian Coleman/Electric Cooperative Retirement Specialist

80/20 Financial Services is an Independent Registered Investment Advisor (RIA) registered in the state of Missouri (CRD# 300772). Being independent allows us to work exclusively for YOU.

80/20 Financial Services is the legal name of our Registered Investment Advisory Firm (RIA). Electric Cooperative Retirement Planning is what we do.

There are different types of "financial advisors". We recommend you work with an Registered Investment Advisor (RIA). It doesn't have to be us. Read more about the different types of advisors here.

Our specialty is retirement planning for electric cooperative employees within 5 years of retirement or already retired.

*We will also work with the families of cooperative employees.

Our mission is to make sure you never lose your purchasing power in retirement.

Notice we said purchasing power instead of money. The biggest misconception that we see when talking to clients and prospective clients about retirement planning is they look at money as a principal amount rather than purchasing power.