What exactly is a market downturn?
Market downturns refer to periods when the stock market continues to fall. You can say we are currently in a market downturn. This is why you may see your portfolio value on ndovu in negative areas.
Keep calm and don’t sell…
Market downturns may cause bearish markets, but they do not always result in market crashes and depressions. They could last a few weeks, a few months, or even a couple of years., who knows! The key thing to remember is that, like the economy, the stock market tends to recover over time.
On Tuesday, September 27th, the S&P 500 fell to its lowest level in nearly two years on concerns about the US government increasing interest rates. This is known as policy tightening.
But don’t panic! Wait… you will thank us.
Economic downturns are unavoidable and can occur seemingly out of nowhere. What matters is how you deal with the downturns. Do not allow fear and anxiety drive you to sell prematurely in a falling market.
As previous market downturns have taught us, those who stay invested reap the greatest rewards! Investing is for the long term, which is ndovu ethos when it comes to investing. So ignore the noise!
Historically, no matter how severe the downturn is, investor portfolios tend to recover from value losses after any decline on average within 18 months. Markets always begin to stabilize and experience long-term positive growth.
We have data to back it.. Check out the graph below.
When prices are low, it is best to stay invested and train yourself to see these as buying opportunities.
What to keep in mind during a market downturn.
Downturns are followed by Upturns:
Investors’ loss aversion instincts are understandably strong. They believe that if they do not sell, they will lose more money.
Well there is something you should know:
Decline in portfolio value is usually temporary. Prices will rise again.
If you sell, you incur a loss.
Smart investors know if they sit tight and wait for the upturn, their portfolios may gain more value than they did before the downturn.
Key to successful investing is determined by the amount of time you spend in the market rather than timing the market.
Timing the market is extremely difficult.
Known Facts:
Investors who time the market have on all occasions missed out on some of the market’s best days.
According to J.P. Morgan, an investor with $10,000 in the S&P 500 Index who stayed fully invested between Jan. 4, 1999 and Dec. 31, 2018 would have gained about $30,000 versus an investor who got out of the market and missed 10 of the best days in the market who have under $15,000. Yes, it sucks to be that investor.
The strategy is to stay invested
Rather than selling on the way down, consider buying.
Key takeaways
Patience and discipline wins the race:
Stick to your long term investment strategy and reap the benefits.
Don’t sell out of fear:
BUY! Take advantage of the market downturn to buy shares at deep discounts and diversify your portfolio.
Now you will thank us in the long term.
Disclosure:
Ndovu is a regulated Robo-advisory platform operated by Ndovu Wealth Limited (‘NWL’). NWL is a Fund Manager licensed by the Capital Markets Authority (Kenya). The information provided on this platform and the products and services offered are intended solely for persons in regions and jurisdictions where such distribution and utilization are in accordance with local laws and regulations. Ndovu does not promote its services in regions where it lacks the necessary licenses; It is exclusively available to persons residing in countries where it holds a valid license or has regulated partners. Ndovu does not extend its services to citizens of the United States, Canada, Japan, and other restricted territories.
Disclaimer:
All ETF products are subject to risk, including country/regional, liquidity, and currency risks. Market prices of securities within the ETF may rise and fall, sometimes rapidly and unpredictably. While ETFs provide diversification through exposure to a basket of securities, they do not eliminate the risk of loss. Diversification does not ensure a profit or protect against a loss. These are non-cis products and are registered by the SEC.
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