Market volatility and major downturns may cause investors to rethink their investment approach, including even moving to cash. Historically, a better approach has been to follow the lessons of the most successful investors: staying the course during a downturn – even adding to positions when the situation seems to be at its very worst – and then sitting tight for what history tells us will be the inevitable recovery.
As the chart below shows, whether it’s stocks, bonds, or a mix of the two, time and time again bear markets have been followed by recoveries that exceed previous highs, while cash has only provided minimal opportunity for growth.
