Stock Market Recoveries
It’s no secret that the stock market can take a nosedive. When it does, it’s normal to want to bail out of the market and stay away until it recovers. But making investment decisions based on emotions rarely serves your long-term financial goals well.
The chart below shows that over the last ten employment downturns, the stock market, on average, bottomed 6.4 months before employment bottomed. Additionally, the average return of the S&P 500 over that 6.4-month timeframe was 22.9%.
What does that mean? If you’re waiting for the economic all-clear before getting back in the market, you could miss a substantial upward move.
What should you do?
- Keep your cool – When it comes to investing, don’t let emotions take control.
- Revisit your asset allocation – A down market can open your eyes to how much risk you’re really comfortable taking. Get your allocation in line and then stick with it. Don’t be tempted to stray based on “hot tips.”
- Big-picture investing – Allocate your investments based on your entire financial picture.
- Focus on the long-term – Chasing returns is typically a ticket to failure. Successful investing is best done with an eye on the long term.
- Tune out the noise – Stay away from large doses of financial news. The majority of what you’re hearing and reading is opinion, and many of the opinions are in opposition to each other.
- Get guidance from someone you know and trust – Your COUNTRY® Financial representative is backed by a team of investment experts. No matter where you’re starting from, you can put that expertise to work for you.
|
Market Bottoms Prior to Economic Turnaround |
||||
|
|
Date of |
|
|
|
|
Job Cycle |
Stock Market Bottom |
Job Market Bottom |
Number of Months Stock Market Bottoms Before Job Market |
Percent Gain in Stock Market from its Low Until Job Market Low |
|
1 |
June 1949 |
October 1949 |
4 |
13.8% |
|
2 |
September 1953 |
August 1954 |
11 |
31.6% |
|
3 |
December 1957 |
June 1958 |
6 |
12.9% |
|
4 |
October 1960 |
February 1961 |
4 |
17.6% |
|
5 |
June 1970 |
November 1970 |
5 |
16.9% |
|
6 |
September 1974 |
April 1975 |
7 |
33.3% |
|
7 |
March 1980 |
July 1980 |
4 |
19.9% |
|
8 |
July 1982 |
December 1982 |
5 |
31.3% |
|
9 |
October 1990 |
May 1991 |
7 |
29.9% |
|
10 |
September 2002 |
August 2003 |
11 |
21.8% |
|
Average: |
6.4 |
22.9% |
||
Past performance does not guarantee future results.
Source: StockVal
| NOT FDIC-INSURED |
| May lose value No bank guarantee |
Investment management, retirement, trust and planning services provided by COUNTRY Trust Bank®. Please see our Terms and Conditions for more information about COUNTRY Trust Bank® and its affiliates.
| 2010-06-28 | /content/financial/staticNav/toolsAndResources/articlesLibrary/articleStockMarketRecoveries.xml |
