Do Downturns Lead to Down Years?
Stock market slides over a few days or months may lead investors to anticipate a down year. But a broad Australian
market index had positive returns in 15 of the past 19 calendar years, despite some notable dips in many of those years.
- Intra-year declines for the index ranged from 3% to 45%.
- Stocks made up ground after each of the losses. The steepest declines saw notable recoveries, and in 15 of the 19 years, stocks ended up with gains for the year.
- Even amid the global financial crisis in 2009, a 15% plunge gave way to a 38% gain by the end of the year.
Volatility is a normal part of investing. Tumbles may be scary, but they shouldn’t be surprising. A long-term focus can help investors keep perspective.