Bare

January 2, 2019 - Published by IAG Wealth Partners

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Hopefully you were celebrating Christmas with family and friends for the past week or so instead of paying attention to the financial markets. It has not been enjoyable.

On Christmas Eve the S&P 500 teetered on the brink of a bear market. At that point it had lost 19.78% since its record high on September 20. Many other common stock market indices are already in bear market territory – small cap stocks, international stocks, and emerging market stocks to name a few.

Instead of a bear market, I believe it would be more appropriate to call this a bare market.

Bear markets lay bare the raw emotions of extrapolating your account value’s trend over the last 3 months for the next 12 months and arriving at something south of bearable.

Bear markets are inevitable, unpredictable, and – in the moment of hyperventilating press reports and temporarily declining account values – can be emotionally unbearable. Yet historically we find that bear markets pass like a storm. Some take barely months while others take several years. We don’t know how long this particular bare market will last or how low it will go.

Right now your long-term financial plan is more vulnerable to emotional mistakes than it has been in many years. The headlines over the next few days, weeks, or months are more likely to boost emotional rather than logical responses to the bare market. Your most impulsive fight or flight instincts could begin to kick in, often wrapped in the “logic” of recent inflammatory “financial news.”

If your long-term plans have not changed over the last three months, your near-term Portfolio GPS should not change due to a bare market.

For long-term investors with a solid financial plan built to put time on their side, bare markets are undoubtedly THE ultimate moment of truth that can make the difference between long-term success and failure:

  • Those who choose to abandon their long-term plan due to near-term fears can be tempted to lock in their losses and derail their long-term financial plan.
  • Those who choose to bear the near-term emotional queasiness with their eyes focused on their long-term goals are more likely to fulfill their long-term financial plan.

We know bare markets are not easy. We know they are not enjoyable. We know they are perfectly normal and – while the timing is unpredictable – are not unexpected. We build our clients’ financial plans knowing they could occur at any time.

We look forward to helping you make wise decisions in the coming days, weeks, months, and years.

Quote of the week

Shelby Cullom Davis: “You make most of your money in a bear market, you just don’t realize it at the time.”


Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through IAG Wealth Partners, LLC, (IAG) a registered investment advisor and separate entity from LPL Financial.

Past performance is no guarantee of future performance. In fact, the opposite can be true. The information contained in this report does not purport to be a complete description of the securities, markets, or development referred to in this material. Investing involves risk including loss of principal.

The S&P 500 is an unmanaged index of 500 U.S. large cap stocks. One cannot invest directly in an index.

Any opinions are those of IAG and not necessarily those of LPL Financial. Expressions of opinion are as of this date and are subject to change without notice. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein.

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