Equity markets do not always go up forever. Just like bull markets market crashes are also a feature of equity markets. However the good news is that stocks generally tend to recover after bear markets. So the trick for investors is not to sell out in panic when equities decline. Investors who are able to stomach the pain during bear markets and hold stocks for the long-term reap solid returns when stocks recover.
The following chart shows this concept in action in Canadian stocks. Similar to other developed markets, Canadian stocks also tend to return to growth after market crashes. The returns after 5-years for the three crashes shown above are indeed surprising.
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Source: Ontario Securities Commission
Related ETF
iShares MSCI Canada Index Fund (EWC)
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