June 27, 2022

Recoveries Reward Patience

When the financial markets are in turmoil and account balances start to fall, there can be a strong temptation to attempt to “do something” to stem any perceived losses. Yet it is often the case that staying the course – or doing nothing – proves to be the better path.

Here is one recent example: A hypothetical 60% stock/40% bond portfolio that stood at $1 million on the morning of November 1, 2018, would have lost 5.7% of its value by Christmas Eve. Yet selling the portfolio at that time and fleeing the markets, even if briefly, would have cost an investor tens of thousands of dollars in two months, versus the alternative of staying invested.

Source: Vanguard

Getting out of the market at the low point of this relatively minor dip would have cost an investor around $100 thousand looking back two months later. Imagine the potential danger of abandoning course amid the current bear market. Weathering downturns in the markets on your own can be difficult, but having a written plan can help investors stay the course during trying times. KDM can help you create a personalized investment plan based on your goals, risk tolerance, and investing time horizon. For more information on how we can help you invest for long-term success, visit our website www.kdminvest.com or give Jeff a call at 630-232-9097.