June 30, 2022
There have been 10 bear markets of the S&P 500 since 1956 (a bear market is a decline peak to trough of 20% or more).
|Start Date||End Date||% Decline||Length in Days|
Source: Barron’s May 16, 2022; Ned Davis Research; Yardeni Research; Bloomberg
It appears that at some point this year, we may enter bear territory. Naturally, many of us grow anxious, not only because the market decline means our money declines, but we also don’t know how long it will last. Add to that for the first time in 50 years interest rates are rising. It’s no wonder many are fearful.
It is hard to step back and say, “The losses are on paper. If I sell out of fear, then the losses become real as they money is no longer invested to grow when the market starts rising again.
There has never been a bear market that did not reverse itself and reach new highs in the coming years.”
Still, it is difficult when we don’t know how low the market will go and for how long. Perhaps the more appropriate question is are you allocated properly for your lifestyle? If you are still working and earning income, it is likely you can “turn the other cheek” while the bear is active. Alternatively, if you don’t work and need the money in your accounts to live on, make sure you have enough in cash and bonds to fund your distributions. In this manner, your stocks can ebb and flow as the market does. The goal is to stay ahead of inflation at a minimum.