What To Keep In Mind About Bear Markets
Bear markets cause panic as the sell off period causes people to believe it’s different this time and the markets will never come back. So, those who panic sell to those who know it’s NOT different, and it will come back. After bear markets, the markets have always gone on to new highs. What makes this time any different?
Past Bear Markets & Chaotic Times Where Markets Rebounded
2008 – Subprime mortgage, housing bubble, Lehman Brothers Scandal
2000 – Dot.com bubble, Enron
1987 – Black Monday. Caused by programming and investor panic
1989 – Savings and Loan Bailout
1970 to 1974 – Vietnam, oil embargo, and quadrupling of oil prices by OPEC, Nixon impeachment, and high unemployment.
1958 – Major Recession
1929 – Stock market crash and the great depression following
1918 – Spanish Flu that took an estimated 20- 50 million lives
Every single time in history, the rebound has gone on to newer highs (But for disclosure purposes, I must say: Past performance is no indication of future results)
If You Can, Buy More While Markets Are On Sale
Share Price before decline $100 a share: $1,000 buys 10 shares
Share Price declines to $70 a share: $1000 buys 14.28 shares
Share Price bottoms at $50 a share: $1,000 buys 20 shares
Total Investment: $3,000 and 44.28 shares owned
If price goes back to where it was when things were normal within 2 years, 44.28 shares would be worth $4,428 which computes to a total return of approximately 47.6%, not including any dividends you may receive.
The views expressed represent the opinion of Christian Financial Advisors®. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness. While Christian Financial Advisors® believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Past performance is not indicative of future results. For any discussion of equity securities: Investing in equity securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. For any discussion of taxes: Christian Financial Advisors® does not provide tax advice and encourages you to seek guidance from a tax professional.