Missing the Rebound

October 04, 2022

 Missing the Rebound 

From January to October of 2022

Think back to a year ago. No doubt it was a great feeling when you saw that light green plus sign next to your investments each month as you opened your monthly statement-. Fast forward to today, and I am sure that feeling is much different.

Year to date, 2022 has been filled with extreme volatility. From rising inflation, an unexpected War in Ukraine, to COVID 19 closures in China.

Instinctively, when the market gets volatile sometimes our inner thoughts may tell us "I can't take this any more" or "I don't care what I've lost I can't lose any more". When this happens, we are allowing our emotions to take over where logic is needed. 

Waiting for the Rebound

For most of this year, we have been focusing on the volatility and the reasons why investments have experienced losses. Perhaps now might be a good time to look forward at what may be coming.

From Capital Group's Keys To Prevailing through Stock Market Declines: The average S&P 500 Market correction (1951-2020) of 20% or more, happens once every 6 years. When that happens, the average correction usually last 370 days from peak to trough.

These corrections include: The 2008 Financial Crisis, The Dot Com Bubble of 2000-2003, The Cuban Missile Crisis, The September 11th 2001 Terrorist Attack, The Black Monday Stock Market Crash of 1987, The Oil Crisis, of 1973, and most recently the Crash from the COVID 19 Pandemic March 2020. 

In the previous examples, the US  faced serious dilemmas. From the threat of Nuclear War with the Soviet Union, an Energy Crisis with the Middle east, an Unknown Virus threatening the health of the world, to Terrorists attacking the heart of our country on a day so many of us won't forget. Through these serious and troubling issues, the US Country and the economy found a way to move forward. Perhaps now is a good time to ask: Where does this correction rank and can we find a way to move forward?

Below is a list of some of the corrections we discussed previously. This list was provided by our friends at PGIM Investments with the article titled: "The costs of missing a market rebound"

Words of Wisdom: 

Before we finish our discussion for the month. Perhaps the great basketball "rebounding legend" can have some wise words for your portfolio...

"A rebounder is always at a disadvantage if he tells himself the only way he can succeed is by out jumping the guy next to him.. Most of my rebounds came from positioning."-Bill Russell