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When Losing 11% is Winning
Over the past year, asset classes across the board have taken devastating plunges.
Precious metals have dropped by 49%.
REITs are down 53%.
Residential home prices declined 17.4% in September – the most on record.
Domestic and foreign stocks have collapsed, losing 41% and 51%.
Investors who have fled to high-grade bonds have done the best so far this year. That is, if losing 11% means “winning.”
Of course, these are indexed returns. Some investors have done better, but many have done much worse.
And with interest rates markedly lower than inflation, even cash accounts are robbing investors right now. So if none of the typical bear market strategies are working right now, where does that leave the average investor?
We recommend taking the long view. Stay the course. Selling now, after stocks have already lost half their value, would be foolish. Plus, here’s the good news: Not far behind every bear over the last 100 years is a raging bull.
The average bear market lasts 18 months. And since we’ve been in this one for 13 months, we may not have too much longer to wait.
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