Are we in a bear market?
First, what is a bear market? It’s when stocks have dropped more than 20% from their last peak.
So yes, in some sectors, we are in a bear market territory. (1)
But, as of this writing, the broader S&P 500 has not entered a bear market. It’s possible it will, especially in this environment, but it hasn’t yet.
So, let’s remember goals-based investors with a financial plan are not day traders.
We’re long-term investors, and the day-to-day and week-to-week gyrations aren’t as important as what happens over years. What’s more important are the values, objectives, and time frames that have been laid out in your financial plan, in advance. If the financial plan doesn’t change, or your personal goals don’t change, then the investments don’t change.
Here’s a quick chart showing just how common big market drops are (2):
The takeaway of this chart is that even though big market drops happen frequently, the long-term average annual return of the S&P 500 is still in the range of 7-10%, depending on the time frame. So expect the ups and downs, because they reward the steadfast and patient investor over time.
Eric Maldonado, CFP®, MBA
Owner, Aquila Wealth Advisors, LLC
(805)250-4552
info@aquilawealth.com
San Luis Obispo, CA
www.aquilawealth.com