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Staying Confident During Turbulent Times

Falling prices in markets can cause some investors to feel anxiety or fear. It can be an emotional roller coaster ride; but, investors who have prepared themselves and their portfolio may be better able to keep their emotions in check.

Let’s start by defining some key terms.

Market correction. Occurs when a major market index moves significantly lower, commonly considered a market drop of at least 10%.
Bear market. Occurs when major market indexes decline more than 20% and stay there for two months or more.
Bull market. Occurs when investments are rising or expected to rise.

Remember your long-term view

Historically, the stock market has experienced nearly twice as many bullish (rise) periods as bearish (decline) periods. And while past performance is no guarantee of future investment results, the stock market has bounced back from every major market downturn to date.

When times get tough, remember your long-term view and consider using these strategies:

  • Avoid "panic selling" out of your investments. Moving all of your money out of investments when prices are low runs the risk of missing potential profits as the market recovers. As soon as you sell, you lock in your losses.
  • Diversification. Keep your assets spread across a variety of investments that have historically performed differently under the same market conditions. Profits from investments that have risen in value may help offset losses from investments that have lost value.
  • Focus on your long-term goal. No one can accurately predict when a bear market will rebound. Remembering why you invested in the first place may help you stay calm during times of market uncertainty.

Most successful investors take a long-term view — at least 3 to 5 years — rather than expecting stellar returns annually or panicking when the value of their investments declines.