Worst case scenario: In nearly 90 years of market history, if you bought stocks on the absolute worst day, the average time to make your money back was 3 years. That's less time than it takes most people to get through high school or college. It's doable. It shouldn't make you shy away from investing in stocks.
The big crashes: Take the 2008 financial crisis. If you got in at the peak, it would have taken 5.5 years to recoup your money.
Want to feel even gloomier: If you invested the day before the 1929 crash, it would have taken you 25 years to be back in the positive. That's a long time, even for a "long-term investor."
And most people understand the need to diversify. While they own a lot of stocks -- a main driver of growth in portfolios over time -- they also own some bonds and other investments like real estate. A more balanced portfolio shouldn't fall as much during the downturns and thus should be able to bounce back faster.
And most people understand the need to diversify. While they own a lot of stocks -- a main driver of growth in portfolios over time -- they also own some bonds and other investments like real estate. A more balanced portfolio shouldn't fall as much during the downturns and thus should be able to bounce back faster.
Can you really time the market? As much as investors want to be sure to get out of the market before it drops, an even worse problem is not being in the market when it's going up. If you've been sitting mostly in cash in the past six years, you've really lost out.
Missing the upswings is more of a Rambo-style nightmare to your portfolio than missing the downturns.
"You have to get two decisions right: You have to get out at the right time and get in at the right time," says Scott Clemons, chief investment strategist at BBH. "And human nature is to get both decisions wrong."
Actionable Items
Can you really time the market? I do not think that I can do that. I set up Victoria and Key Largo two portfolio in May 2019.
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