We want to talk with you about the best, yet incredibly rare, opportunities that we ever see as investors. These opportunities are so rare, in fact, that they have only occurred six times since World War II yet have returned an average of 46% just one year later.

These opportunities, of course, are severe market declines. In this case, those declines of 33% or more. These rare instances have allowed the long-term focused investor to supercharge their returns and grow their wealth faster than many may have thought possible. 

This chart shows the six declines of 33% or more in the S&P 500 since World War II.

Although this covers the last 80+ years, we are fortunate to have been able to take advantage of half of them for our clients.

They all have two key things in common. 

First, no one was able to accurately predict in any meaningful way when the declines would start or when the market would begin to recover and resume its path upward. 

And second, the market returns after each decline were dramatically higher than normal in the one-, three-, five-, and 10-year periods afterwards. 

Look at these average returns – they are remarkable:

• 46% after one year
• 64% after three years
• 95% after five years
• 178% after 10 years! 

These previous declines are now history, but they can still help our investment returns in the future. We can learn from them and have a plan for the next decline. 

Our plan for our clients is as follows: during the next severe market decline, no matter the reason or the outlook, we will not only hold onto our stock investments, but we will use the decline as an opportunity to add to these stock positions at the new discounted prices. We have no way of knowing when this will occur, which means we will maintain enough of a cushion in client accounts to not only survive the decline but be well positioned to benefit from it in the long-term.

Be on the lookout for our next Financial Planning Fridays episode. Subscribe to our Youtube Channel so you never miss an episode. Or contact us directly; schedule your 15-minute call with us today.