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Periods of falling equity prices are a natural part of investing in the stock market
Equity indices have had a rough start to the year. The Nasdaq 100 and small cap Russell 2000 are down 20% or more since the beginning of January. The large cap S&P 500 has declined about 18%.
Down markets are inevitable. Unfortunately, they are unpredictable in terms of starting point, severity, and duration. In short, market timing is difficult at best and more likely a recipe for underperformance.
In volatile times, the benefits of diversification and long-term investing are often what keeps people from acting irrationally. Those are just two of the five things to remember in the attached article from our partners at eMoney.
Bear markets are painful. Staying calm in the face of market declines is challenging. As the article states, “Periods of falling equity prices are a natural part of investing in the stock market. Bear markets follow bull markets, and vice versa. They are considered the ‘ebb and flow’ of wealth accumulation.”
Read more in the attachment.
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