Part 4/8:
Understanding the historical context of market trends can empower investors to maintain their resolve during downturns. As Vanguard points out, dramatic losses often herald a recovery phase, characterized by surging bull markets. Importantly, investors must realize that while individual bear markets can feel prolonged and painful, the recovery phase tends to restore—and often exceed—previous valuations.
Vanguard stresses the notion that “time in the market beats timing the market.” Missing a few of the best trading days can significantly impede long-term performance, suggesting that attempting to sidestep market downturns by moving to cash is generally not a sound strategy.