A Disciplined Investment Strategy

2/28/2022 - By Chris Stennett, CFP

It’s important to have a disciplined investment strategy in place when investing. Reacting to short-term market swings by making dramatic portfolio changes will inevitably lead to a more stressful investing experience. Looking at the S&P 500 dating back to 1928, we see that 95% of all years had at least a 5% loss at some point in that year.

63% of all years will see a 10% or worse loss, yet the S&P 500 has finished with positive returns two out of every three years on average. While bear markets and market crashes are less common (every seven and 12 years respectively), investors should still expect to live through multiple variations of each in their remaining lifetime. Rather than letting market movements dictate your investment strategy, consider using a strategy that considers the frequency of these market movements when constructing your portfolio.

For more information, read this blog by Mark Hemby, CFA about market volatility.