March 30, 2023

Categories: Investment

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Marked by high inflation, steep interest rates and the threatening loom of recession, 2022 was a depressing year for many investors. Now that we are nearly a quarter of a year past 2023, things are not looking all that rosy yet: we have Federal Reserve Chair Jerome Powell suggesting that “rates may need to go higher for longer, fueling fears of a potentially larger hike at the central bank’s next policy meeting”.

Looks like turbulent times are here to stay for a while more – how ready are you (and your investment portfolio)? Well, if you are harbouring thoughts of cashing out, maybe a read of the below pointers might sway you otherwise.

Let’s look at where and when we entered into a bear market. Reported by CBS News on 13 June 2022, the S&P 500 officially crossed into bear market territory when it closed more than 21% below its record high achieved earlier in January.

BUT… history indicates that bull markets often follow bear markets. Bull markets also tend to last longer than bears and yield higher recovery gains… if you are patient enough and stay the course. Warren Buffett once said, “The best chance to deploy capital is when things are going down.” Wise investors like Warren Buffett know that a bear market presents buying opportunity.

Crestmont Research has published data showing that the S&P 500 has produced positive returns every 20 years since 1919. This means, an investor who managed to hang on tight to S&P 500 investments bought in 2000 would probably have doubled their money approximately two decades later.

A long-term mindset is one of the most valuable traits any wise investor can possess. That and good holistic financial planning, as well as having someone to share perspectives with on the next move to make – I will be happy to speak anytime.

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