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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

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