A true long-term investment perspective should include both the future and the past. By taking into account events that shaped the markets and their subsequent recoveries, we can learn from patterns of the past and maintain perspective about the future.
From a historical perspective, investors who fled the equity market to ‘de-risk’ or attempt to time the bottom may have missed out on potential market snapbacks after the bottom eventually was hit. Historically, equity markets have averaged almost 30% in the first six months following the lowest point of a cycle. Time is the greatest diversifier and investors should aim to practice discipline, not heroism.
Timing any market is extremely difficult–timing the bottom of a bear market is nearly impossible. Dislocations are uncomfortable, but they have been historically temporary. If history alone is any indication, markets should eventually rebound. But there will continue to be uncertainties and volatility along the way.
Liz Young, CFA, director of market strategy, BNY Mellon Investment Management.
Please note the content on this website is for Investment Professionals only and should be shared responsibly. No other persons should rely on the information contained within this website.
CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.
Investment Managers are appointed by BNY Mellon Investment Management EMEA Limited (BNYMIM EMEA) or affiliated fund operating companies to undertake portfolio management activities in relation to contracts for products and services entered into by clients with BNYMIM EMEA or the BNY Mellon funds.
Thank you for submitting the MarketEye Subscription Form. If you wish to review your Preferences please click here.
