In my 25 years I have seen six bear markets and numerous corrections and pullbacks.
- Overseas currency crisis(es)
- Russian default,
- Tech wrecks and the Tech Bubble
- The financial/housing crisis and the Great Recession
- Interest rate tightening cycles (and cuts and raises again)
- China slowing scares
- Economic growth scares
- Covid crash
- Wars. Rumors of wars. Good times and bad.
Much of my career, especially in beginning, I was kicked in the shins by the market. I have never forgotten the risks in the market and how that feels so I never lose sight of it.
These are the times when you could lose significant sums of money, experience setbacks, or even worse, never recover. Stories you hear about friends, and family "losing it all" were born during these times (i.e. like 2000, 2008). Speculative stocks, some individual stocks, crypto, SPAC's, stay at home stocks, meme stocks. Fads. Many of these have and will crash and may never recover just like fads of the past. If you are in the wrong place you could be wiped out.
What we are doing by tilting towards value stocks, targeting the shorter end of the yield curve, preferring quality over junk, and staying diversified. These things can preserve capital and help you stay on track for your financial goals.
Let's remind ourselves of our strategy. Stay diversified, rebalance, and wait for the recovery. Corrections and bear markets are normal and temporary. The stock market's track record is a good one, it’s recovered 100% of the time.
The views and opinions expressed herein are those of the author(s) noted and may or may not represent the views of Capital Analysts or Lincoln Investment. The material presented is provided for informational purposes only. Nothing contained herein should be construed as a recommendation to buy or sell any securities. As with all investments, past performance is no guarantee of future results. No person or system can predict the market. All investments are subject to risk, including the risk of principal loss. Diversification does not guarantee a profit or protect against a loss.