See the attached, I am always looking for ways to educate my clients, family and friends on this ever changing and complex world of investing.
This is a great research piece from one of our bond only managers that we sometimes utilize in our portfolios. It is great to get perspective from a non equity manager as well as the equity guys. They often shed some light and have a different perspective. I particularly like the viewpoint on the term volatility and some great points made for us to all keep in mind.
“S&P 500 Index Declines in Perspective – The Deeper the Stock Market Decline, the Longer the Recovery Declines in the S&P 500 since December 31, 1945 (Post WWII) Sources: Bloomberg, Redwood. Data as of 3/31/18. For illustration purposes only. An investor cannot invest directly in an index. For additional information please see disclosures at the end of this commentary. History doesn’t always repeat itself, but it often rhymes. Looking at the above chart for context, markets historically tend to recover over time. The question is how much time and how severe a pullback can an investor handle without capitulating. A 5-10% drawdown on average only took 3 months to recover, providing some comfort to the most recent pullback. However, the data shows that the larger the decline, the longer it historically takes to recover. A drawdown in the S&P 500 Index of 20%+ led to a 2-year recovery time, on average. This is why we believe it is important to have an active, tactical, risk-managed component in a portfolio that seeks to reduce exposure, with the goal of avoiding larger drawdowns”