What Charts Can Tell Us

Susan Jung |

A picture can tell a story better than words. Below are a few charts which will give you a sense of what history has looked like in times of difficult markets. They are a bit complicated but if you look through these images carefully, you’ll see a reason to be hopeful and that there is a light at the end of the tunnel.

1. The first chart shows that bear markets tend to be intense and very short-term. Bull markets tend to be longer and over a more extended period of time. Short-term pain is still painful and the long-term is out there to give us hope for returns.

Source: https://static.fmgsuite.com/media/documents/2a6b79a9-ac7f-490f-b898-5f0672dde1db.pdf 

The following chart shows how short bear markets often are relative to bull markets. Bear market downturns tend to be pretty violent on the downside. Recoveries tend to be more gradual and over longer periods of time. That’s why many say a long-term investment is prudent.

Source: LPL Research, FactSet 5/20/22

Trying to time the market is a difficult game that is rife with perils. In particular, there are usually a pool of days throughout the course of the year where returns really are impacted. If you’re not invested on those days as an investor, you may very well miss out on the market rally recovery.

Source: https://www.cnbc.com/2021/03/24/this-chart-shows-why-investors-should-never-try-to-time-the-stock-market.html 

The last chart shows what bounces after bear markets might look like. It’s safe to say that investor emotions can go from grief to euphoria pretty fast, That’s why we avoid pure market timing, and instead make tactical choices when we think the odds are with us and securities present opportunities.

Source: https://lplresearch.com/2020/03/31/examining-bear-market-bounces/ 

Lastly, every quarter end, we will be providing you a weekly update focused on pictures and graphs to give you a better sense of market dynamics and economic conditions. A picture really can speak a thousand words and we will make sure this is regular part of our communication with you.
Remember, if you would like to learn more about this information, please let us know.

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