Oh boy… Up until last week, investors were enjoying solid returns through the first seven months of 2024. However, as of early August, that momentum seems to have stalled. The VIX Index, which gauges market volatility, had been relatively stable for over a year, yet suddenly has surged. This increase has been accompanied by a sell-off driven by concerns over Middle East tensions, recession fears, and the upcoming election.
Our advice to long-term investors remains consistent: HOLD! Ride this out. Stick with your investments. If possible, use excess cash for income needs instead of drawing from stock or bond portfolios during these turbulent times. Moreover, when stock prices are down, it's a good opportunity to BUY if you have excess cash reserves.
Finally, let’s keep things in perspective. Please review page 1 of this chart, S&P 500 Annual Performance 1957-2023. During these 67 calendar years, 72% of the time the S&P 500 was “Good,”as its average return was 16.9%. Conversely, in 28% of those years were “Bad,” with average annual losses of 12.7%.Overall, combining the good with the bad, the average return of all years was a healthy 8.5%.
For Henry Wealth Management clients, your portfolios are typically less aggressive than the S&P 500, so your highs and lows are more moderated. Nevertheless, long-term investors will inevitably face losses from time to time. It happens! Giving in to fear and selling only locks in losses, whereas staying the course, even when nerve-wracking, allows you to weather temporary downturns.
We’re here to support you. If you have questions or concerns, please reach out. Thank you for your continued business and trust.