Dave Nickle, HNW Financial

We’d like to share some facts about Bear markets with you. The first fact you need to know about bear markets is that they are as common as dirt! There have been 27 bear markets (using the S&P 500 as our guide) since 1928. Since World War II, there have been 15 of them, which works out to one about every 5 years.

Since bear markets are as common as dirt, and because they are simply inevitable and unavoidable, it is absolutely crucial to approach them properly. Especially when you consider these facts:
• Half of the S&P 500 Index’s strongest days in the last 20 years occurred during a bear market.
• Another 34% of the market’s best days took place in the first two months of a bull market—before it was clear a bull market had begun!

So knowing this, it should be crystal clear to any serious investor that any attempt to time the market – in ANY sense – is a very effective way to blow one’s financial brains out. Which is what the vast majority of stock market participants always do….. ALWAYS!

Now, please consider the good news below, which will give you the Faith, Patience & Discipline every true investor must possess to achieve their financial goals:

Bear markets tend to be very short-lived. The average length of a bear market is about 9.6 months. That’s significantly shorter than the average length of a bull market, which is 2.7 years. Of the last 92 years of market history, bear markets have comprised only about 20.6 of those years. Put another way, stocks have been on the rise 78% of the time.

Bear markets should be endured at the very least, however we recommend our clients to EMBRACE them.

For investors who are actively saving for retirement, bear markets are a gift from heaven! But alas, these sales are only temporary… So if you have the means, back up the truck and load up as much as you possibly can while grown men are weeping – embrace the opportunity while it lasts.

For retired clients, bear markets, understandably, don’t feel like such a gift, but consider this: reinvested dividends & capital gain distributions (which can be very substantial) can be reinvested at bargain prices, ready for the inevitable return of the bull market.

It should also be noted that any investor at any stage in life can control their own behavior. Most big purchases can be deferred. So during adverse market conditions we suggest kicking the can down the road on big ticket items. Wait it out, and only use what funds are absolutely necessary during inclement market conditions. When the bear market inevitably ends, you can then celebrate by unclenching those purse strings when conditions are more favorable…

At HNW Financial, we are long-term, goal-focused, plan-driven equity investors. We and our clients own diversified portfolios of superior companies which have demonstrated the ability to increase earnings (and in most cases dividends) over time, supporting increases in their value.

Change your relationship to volatility and you’ll put the odds firmly in your favour of investment success. We may be wrong, but we doubt it!

Source for bear/bull market stats is Ned Davis Research as of 12/15/21.
S&P 500 Index is a market capitalization-weighted price index composed of 500 widely held common stocks.