As we navigate through today’s volatile markets and endure the steady declines seen during the first part of 2022, it’s important to maintain some historical perspective. It’s true that year-to-date equity returns through May 15 rank among the worst in market history; however, of the 10 worst declines for this period in history, the market has rebounded in six of those years and declined further in only three. Notably, the market has rebounded by an average of nearly 10% in these instances. History provides only lessons, not assurances, and with the current economic and geopolitical environment, volatility and uncertainty are likely to persist. How the markets will react is equally uncertain — but one thing is for sure: It’s important to stay the course.
None of us has a crystal ball, and it’s possible the market could continue its current trajectory. But history does provide us a precautionary lesson, and that lesson is to not panic. After all, the only thing possibly more painful than the recent selloff would be to exit the market and watch it recover those losses without participating. In the words of legendary investor Warren Buffett, “It’s never paid to bet against America. We come through things, but it’s not always a smooth ride.”
The below chart details the top 10 worst starts to the market and how it rebounded over time. Bottom line? Hang in there.
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