“He that can have patience can have what he will.”
― Benjamin Franklin
With stock markets exhibiting volatility this year, many investors have found it difficult to weather the ups and down of the market and are running to the exits and going to cash. However, this short-term thinking has historically not been the best decision since markets do bounce back and, in many cases, bounce back quickly. Historically, on average, it has taken about 19 months for stocks to recover their losses from a bear market or near bear market. However, for the last three bear or near bear markets (2011, 2018 and 2020), it only took stocks four to five months to make up the losses1. This quick recovery is a good reason to be patient and let the markets work themselves out. Avoiding a trigger finger approach to stock investing can lead to long term investment success. So, what are some things you can do as an investor to make sure you use patience in your long-term investment strategy?
- Don’t look at your investment account statements – the less you look at your account balance, the less likely you will want to act and make an impulsive decision.
- Stop watching shows that focus on the day-to-day movements of the markets – the goal of these shows is to be dramatic and focus on the short-term dynamics of the markets. This can lead to decisions that may not be in your long-term best interest.
- Stop listening to friends’ and family’s stock and investment advice – as much as friends and family are trying to help you, their advice can lead to confusion and frustration and potentially lead you to make the wrong decision about your investments.
- Make consistent contributions to your investment account – implementing a consistent monthly contribution into your investment account allows you to focus on the long term and silence the short-term noise
- Work with an investment advisor – an investment advisor can help keep you in the market when volatility increases and focus you on your long-term goals.
Utilizing a long-term approach in Investing is difficult since it requires you to forgo immediate gratification and be thoughtful in your decisions. Patience is not only a virtue but is a proven way to navigate the turns in the market and realize the benefits of long-term investing.
1″Bear Market Fears: Here’s When Stocks Usually Bounce Back After a Downturn” by Mallika Mitra, May 25 2022
Mario Hernandez has been a Certified Financial Planner (CFP) for over 30 years and brings a vast amount of experience in the financial planning and investment management business. Through Longevity Wealth Management, Mario provides holistic planning services that help clients find solutions to live their best life. Mario’s email address is mario@longevitywealthmanagement.com. Securities offered through Osaic Wealth, Inc. member FINRA/SIPC. Investment advisory services offered through Longevity Wealth Management. Osaic Wealth, Inc. is separately owned and other entities and/or marketing names, products or services referenced here are independent of Oasic. Certain insurance products are offered by Mario Hernandez as a licensed agent independent of Osaic Wealth, Inc.. Mario Hernandez is not affiliated with Osaic Wealth, Inc. or registered as a broker-dealer or investment advisor.
