The Case for Calm Amid Market Volatility

Looking Beyond Short-Term Volatility

Big swings in markets are always hard, and the unprecedented impact of COVID-19 has made recent turbulence even harder. But short-term volatility in the face of acute uncertainty over COVID-19 has the potential to create opportunity for those who think longer-term.
 

Putting Bear Markets in Context

Equity market declines are a normal part of investment cycles and are part of a long-term positive trend that can reward those who stay calm and remain invested.

Since 1928, the S&P 500 has been below the previous peak 39% of the time.

Source: ClearBridge, Anatomy of a Recession. As of March 31, 2020. Annualized returns for the S&P 500 since Jan 2, 1928. Shaded area represents periods when the S&P 500 Index was at least 20% below the previous peak. Past performance is no guarantee of future results.  Indexes are unmanaged and an investor cannot invest directly in an index. Unmanaged index returns do not reflect any fees, expenses or sales charges.  

The Importance of Staying Invested

When things change suddenly, it’s easy to panic and pull money out of the market. But that can easily reduce long-term returns.

That’s because when the market bounces back, it can happen suddenly and quickly. Missing just 10 key trading days from 2000-2019 would have been enough to reduce an investor’s returns by half. 

A Few Days Can Make a Difference

Source: Legg Mason. As of Dec 31, 2019. Past performance is no guarantee of future results. Indexes are unmanaged and an investor cannot invest directly in an index. Unmanaged index returns do not reflect any fees, expenses or sales charges. 

Keep Your Perspective 

Stay focused on your goals. What will it take to get you where you want to be on the timetable you have set? Consult your financial professional if you believe that it’s important to consider a change. Another perspective is important.