In this month’s client’s corner, Nick Murray discusses the eight, almost nine, economic recessions that have taken place in the United States since 1970.
Recessions can certainly be scary for investors, and nobody enjoys watching the value of their portfolio go down. However, it’s important to remember that recessions are a normal part of the market cycle. Financial markets are resilient. They have crashed, recovered, and reached new highs time and time again. Over time, the uptrends always outweigh the downtrends.
Dramatic markets make good headlines, but they need perspective. Volatility is typically a short-term phenomenon measured in days, weeks, and months. Over the years, the historic performance of the stock market is a patient reflection of the growth in the economy and the businesses that contribute to that growth. When invested in high quality, blue-chip investments with a proven track record of earnings performance or dividend payout, Long-term investors can take comfort in the steady increase in value that major stock markets have demonstrated over the years.
Humans have a powerfully instinctive drive to over anticipate and overreact. When it comes to investing it’s important to focus on history versus headlines. This isn’t just the ultimate truth for investors about recessions. It’s the ultimate truth for investors, period. The issue is always your perspective.
We hope you enjoyed this month’s Client’s Corner. Please do not hesitate to reach out if you have any questions or feedback.
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