Wisdom Wednesday with Viva Financial
HOW LONG DO RECESSIONS AND BEAR MARKETS LAST?
IS THIS THE “BIG ONE?”
When faced with down markets, it is natural to become uneasy of your investments. Nobody likes to see an account balance decline. How long will this period of discomfort last?
According to American Funds over the past 70 years:
• The average recession lasts 11 months vs 69 months for expansion.
• The average bear market lasts 14 months vs. 72 months for a bull market.
This is not the first time we have been faced with a recession or bear market. Nor will it be the last. When faced with a negative environment it is easy to panic. However, history shows us these periods last for a relatively short period of time.
While we often don’t realize it, even in positive returning years, we commonly see a negative intra year return. According to JP Morgan the average intra year drop has been 14% over the past 42 years. While 32 of those 42 years had an end of year positive return.
In reviewing this information, I was reminded of a childhood television show, Sanford and Son. For those of you who remember watching this show, this clip may bring back some fond memories. I encourage you to watch this short :38 second clip, twice. First watch how Fred Sanford overreacts (an example of how we feel in a bear market). Then watch his son Lamont keep calm (an example of someone that has experienced this before).
We don’t want you to take on more stress than needed. No matter what statistics show, a discussion may be beneficial to you. If you would like to discuss your specific situation, please give us a call 614-831-0800.
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