If you manage your portfolio with us, then you already know this: We jointly assess your risk tolerance with a detailed questionnaire. But first, back to the question: Can you withstand the drawdown? How much loss can you bear?Ĭan you stand a 50 percent loss without intervening in your portfolio? Is a 30 percent loss the threshold at which you just have to do something? Or do you sell your shares without further ado at the first turbulence of 10 percent? Yes, there are indeed winners and later you will find out how you can be one of them.
Likely resulting in you being among the biggest losers in the game of market timing – while selling your shares to the laughing winners. If you get scared when the prices collapse, there is a big risk that you sell at the dumbest time. Without the recovery, you are forfeiting the opportunity.
Because the gains let the losses from the crash fade away, becoming just a hiccup in the course of time. And thereby to also participate in the recovery. Even the vast majority of professionals don't succeed at it.īut market timing is not even necessary. If we could, we would probably all prefer to buy at the dip and sell at the crest. Either way, we should prepare ourselves for an emotional reaction and be mentally ready – because a loss will come. Portfolio managers even have their own term for these dents in the portfolio: A drawdown. In most cases, the recovery has been even swifter. This is the longest time the index has taken to recover from losses – and finally rise again above its past peak for the first time. Here comes the good news: None of the periods with losses exceeding 20 percent has lasted longer than 13 years. Returns and Max Drawdown of S&P 500 since 1871 This means that all dividends paid out are reinvested in shares. We have calculated the index including dividends. The price data goes back to 1871 – ideal for a long-term look back. The S&P 500 index comprises 500 stocks issued by large-cap companies. This is because not only is the crash often steep, but also the recovery afterwards. Historically, shares have nevertheless yielded the highest returns of all asset classes. But they are certainly part of the stock market cycle. Stock market slumps don't occur regularly enough for you to set your alarm clock by them. But: Can you lose as much as you want to win? If you want to invest in shares, you have to think like in any game: Only those who can lose can also win. Sometimes even a real crash occurs, however that's not so bad for long-term investors – just as long as they don't panic at the wrong moment. Be honest with yourself: Can you lose as much as you want to gain?Įquities produce better returns than other asset classes. Equities produce better returns than other assets.
0 kommentar(er)
