It’s been such a great run, it’s easy to forget the significant bumps along the way. In fact, since the 2008-2009 recession, the total return for the S&P 500 was 336% from it’s low point on March 16, 2009 to November 30, 2018.
But it hasn’t always been smooth - there have been 5 significant market declines worth noting during this bull market:
A bumpy ride is not new or abnormal. In fact, in 21 of the past 38 years, the S&P 500 had an intra-year drop of 10 percent or more. Investors that stayed the course and did not move to cash in each of these downturns were rewarded handsomely as the market ultimately rebounded and rose to new highs. Those that panicked and moved to cash, frequently locked in their losses.
We believe the single best strategy for most people is to stay invested in a risk-appropriate, diversified portfolio. One that balances growth from stocks with the relative safety of investment grade bonds. One of the easiest ways to achieve a balanced mix for your age is the Vanguard Target Date Funds. These funds will automatically rebalance your account for you, given your age and time to retirement. Best of all, as you get close to retirement, they will gradually reduce your risk for you.
David Ramirez, CFA, is a recognized 401(k) expert with over 20 years of experience in 401(k), ERISA, cash balance plans, and ESOPs. A UC Berkeley graduate, he played a pivotal role at Financial Engines, a 401(k) advisory firm founded by Nobel Laureate William Sharpe, Ph.D., where he was a portfolio manager who helped manage over $50B in 401(k) assets. His clients included some of the largest Fortune 500 companies and state governments.
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