One of the Most Important Things to Know About Investing
Pop Culture Finance will tell you that the market goes up and the market goes down. However, the market always goes up over time. So, are the big declines or bear markets really that bad? Well, you need to get into the numbers and survey the damage that a bear market can inflict.
Here is the first stat for you -
The 2000-2002 technology bear market erased roughly 6 years of growth in the stock market. Once the final low occurred in 2003, the stock market was in the same place as it was in 1997.
The 2007-2009 financial crisis erased roughly 13 years of growth in the stock market. Once the final low occurred in 2009, the stock market was in the same place as it was in 1996.
Here is the second stat for you -
If you lose 50% of your retirement assets in a bear market, you have to go up by 100% to be whole again. As the loses get greater, that percentage recovery grows dramatically!
I realize that I have been writing more about the potential challenges we may have in the stock market. We might not have these challenges. The evidence is weighted pretty evenly for both cases. Just consider this a drill. I want you prepared for what might come so that you are not surprised.
It is important to have a game plan for risk.
This is why I am holding the Investing in Uncertain Times webinar May 17th and May 19th. The purpose is to visually provide for you a way to create a game plan for risk for your 401 K plan as well as accounts outside of your company retirement plan. As a participant in the first of many webinars targeted to increase your level of education on how money works, you will be a part of an email group where I will keep you informed on the signs that the market is either gaining in risk or becoming a great opportunity again. You have to go through the webinar to be included so that you will have a frame of reference for the emails going forward. To register, click HERE. You can also register by texting "INFO" to 747-84.