Financial Planning Fridays #148: We Will Face a Bear Market Again
The longer you stay invested, the more certain it becomes that you'll experience a bear market, a decline of 20% or more. This video walks through the odds of hitting one over a one, five, and fifteen year horizon, and explains why Presilium plans for these downturns ahead of time instead of trying to avoid them, so temporary declines can become opportunities.
The longer you stay invested, the more certain it becomes that you'll experience a bear market, a decline of 20% or more. This video walks through the odds of hitting one over a one, five, and fifteen year horizon, and explains why Presilium plans for these downturns ahead of time instead of trying to avoid them, so temporary declines can become opportunities.
Key takeaways
- The odds of experiencing a bear market, a decline of 20% or more, rise the longer you stay invested: about 1 in 3 over one year, 77% over five years, and effectively certain over 15 years.
- Facing a bear market is not a reason to avoid investing; it is a reason to plan ahead so declines can be used to your advantage.
- Every bear market Presilium's clients have faced has, in hindsight, turned out to be an opportunity for long-term investors who stayed the course.
- Staying invested, staying diversified, and staying focused on long-term goals matter more than reacting to short-term headlines.
Hi friends. Today I want to show you one of the most important charts you'll ever see as a long-term investor. It's about bear markets, those times when the market drops 20% or more. And this chart shows the odds of experiencing a bear market based on how long you stay invested.
If you invest for just one year, there's about a 1 in 3 chance that you'll hit a bear market. But if you stay invested for 5 years, that chance jumps to 77%. And by the time you reach a 15-year time horizon, it's 100%. A bear market is a certainty.
So, what should we do? If you're going to be a long-term investor, and we believe you should be, you're going to face a bear market, and probably several of them. And that's not a reason to panic or not make investments. It's a reason to plan ahead of time so we can take advantage of these temporary declines.
At Presilium, we don't try to avoid every decline. We help you build a plan that's strong enough to weather them. In hindsight, every bear market we have faced has actually been a great opportunity. The key is to stay invested, stay diversified, and stay focused on your long-term goals, not short-term headlines.
We have created a custom report for each of our clients that shows how your portfolio is positioned for the next inevitable downturn that we would love to share with you. Thank you and I look forward to talking with you next Friday morning.
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