How LONG CAN IT TAKE TO GET BACK TO BREAKEVEN?
During bear markets, the expression “hang in there… stocks always come back” is commonly used when nervous investors understandably have questions.
Why is it so important to have a bear market exit strategy?
The two charts below show in the long run buy and hold has proved to be an effective strategy; the question is what happens if the 17-year or 26-year periods shown below occur during your retirement? Many investors cannot afford to wait 17 to 26 years for buy and hold to make it back to breakeven.
How well would you sleep at night if one of these periods occurred during your retirement? Fortunately, there are things we can do to minimize the probability of getting hit by very large drawdowns (portfolio losses). A key tenet of the CCM Market Model is to identify low-probability periods and make defensive adjustments on an as needed basis.