Equity markets go thru bull and bear markets every few years or so. While bull markets are great and makes every investor a genius, bear markets offer excellent opportunities to build wealth for long-term investors. This is because unlike in bull markets, stocks are cheaper and investors can pick up more of them for the same amount of investment in bear markets. Of course, investing new cash when everything is collapsing is not easy to say the least. It takes courage and deep faith in stocks to jump into stocks when everyone else is bailing like the world is about to end. However investors that grab equities on the cheap and hold tight until the market turns and soars can earn astonishing returns.
The following chart shows that stocks have grown over the long run despite going thru many market moving negative events over the years:
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Source: Braving bear markets: 5 lessons from seasoned investors, Capital Group
Related ETFs:
- SPDR S&P 500 ETF Trust (SPY)
Disclosure: No positions
