180 Years of Stock Market Losses

We recently read a wonderful piece from Ben Carlson who writes a blog under the name A Wealth of Common Sense.  You can check out the full piece here http://awealthofcommonsense.com/2018/01/180-years-of-stock-market-drawdowns/

The article emphasizes a point we make constantly - market risks are real.  In fact, risk has been an element of markets going all the way back to the 1800s.  Stocks are usually in a "drawdown" state.  What does this mean?  Stocks don't make new highs every day.  Most of the time your portfolio will be worth less than its all time high.  

To give more context on what this looks like, check out the chart image.  It shows the percentage the market was underwater (in a drawdown period) going back to 1927.

DDs 100yrs article.png


Wonder why we talk about risk all the time? The article emphasizes that markets will likely continue to fluctuate and experience losses on a regular basis.

This is why we look to side-step the worst losses as a major part of our investment process.  Maintaining your portfolio and keeping you aligned with your goals is the most important job we have.