allworth-financial-logo-color
    • Wealth Management
      • Financial Planning
      • Investment Management
      • Tax Planning
      • Estate Planning
      • Insurance Services
    • 401(k) For Employers
    • For Airline Employees
    • Our Approach
    • Why People Work With Us
    • Office Locations
    • FAQs
    • Our Fees
    • Our Story
    • Advisors
    • Our Leadership
    • Advisory Firm Partnerships
    • Allworth Kids
    • Webinars & Events
    • Podcasts
    • Financial Planning
    • Investment Management
    • Tax Planning
Meet With Us
  • Locations
  • Login
  • Contact

4 essential reminders when investing in bear markets

  • Share this post

Allworth Co-CEO Scott Hanson shares four key points to keep in mind as the Federal Reserve hikes interest rates and we embark into bear market territory.

 

We’ve officially entered a bear market. And while that certainly feels crummy, it’s nothing new.

Bear markets are every bit as common as bull markets, housing bubbles, oil shocks, tech breakthroughs, schizophrenic digital currencies, and every other economic influencer that can drive stocks higher, lower, or into stagnation.

We’ve been here before. We’ve seen it before. And we will be here again.

So, what can you do about it?

First, second, third, fourth, and fifth, stay calm. Don’t make any rash decisions about money. If you’ve been working with an Allworth advisor, or another reliable fiduciary advisor (someone who has worked with you to build a long-term financial and investment plan), stay on course.  

Simply, do not unilaterally make changes to your long-term investment strategy or portfolio allocation without talking to your advisor first.

We understand. It’s extremely difficult when the sky is falling to remain calm … so just remember this: The sky isn’t falling.

We are in a storm, and history shows that this storm, like all storms, will pass.

Here are 4 essential reminders about investing and bear markets.  

1. History tends to repeat (and that’s typically a good thing)

From 1995 through 2021, a period that includes major market declines resulting from tech bubbles bursting, to 2008’s markets crashing, to Great Recessions recessing, and on to the pandemic-induced 3,000-point Dow Jones drop of March 16, 2020 (about 13%), remember this: despite everything, the average yearly growth rate of the S&P 500 exceeds 10%.[1]

And while no one can predict the stock market with certainty, remember that each significant crash of the last century was followed by a period of recovery. For example, after the 2008 market crash, the recovery began pretty much immediately and achieved an eventual increase of 178% in 5-years.[2]

These past events underline the importance of focusing on long-term financial strategies and goals, and not on short-term fluctuations. The markets will have bull and bear runs which need time to do what they do without you or me trying to anticipate or respond to short-term trends.

2. Keep saving

Be it in a 401(k), or with your advisory firm, an error that some anxious investors make is to stop saving once the markets begin to slide. On the heels of the 2008 crash, one study found that more than a quarter of respondents either stopped saving for retirement or stopped adding to their 401(k).[3]

That was a big mistake. How so? Between 2009 and 2019, the average 401(k) retirement plan balance rose by 466%. [4]  

If you’re still working, keep saving in your retirement accounts. If you’re a do-it-yourselfer, while I can’t emphasize enough the value and importance that working with a qualified financial advisor can add (as much as 4% or more in annual returns [5]), one way to continue your savings momentum when the markets take on water and nerves are being tested is dollar-cost averaging (DCA). DCA is investing a fixed amount on a regular schedule (e.g., per pay period or monthly) that over time generally results in buying more shares when prices are low and fewer shares when they are high. [6]

3. Don’t move to cash

When the markets slide, ignoring the urge to move to cash (which is basically timing the markets) is something we generally emphasize to all our clients. And while this is obviously true during more typical downturns, right now, with inflation higher than it’s been in 40 years, it’s perhaps truer today than ever before.

That’s because, unfortunately, your cash is losing value by the day.

While the Federal Reserve's June 15th three-quarters of a percentage point interest rate hike, implemented to try and tame runaway inflation, will nudge returns on savings accounts and CDs up just a bit (and make borrowing money that much more expensive), it will not immediately tame the current cash woodchipper that is inflation. Looking back a month, if a one-year CD has been paying you 1.5%, with May's inflation rate coming in at 8.6%, money in that CD still recently lost 7% of its value. [6]

4. Ask if your asset allocation needs updating

It never hurts to meet with your advisor to make certain that your investments still align with your needs and time horizons. That is to say, of course! Call. Email. Schedule an appointment. It would be my overarching hope that you and your advisor have a conversation that places the current market and economic turbulence into perspective.  

Remember, because the markets have trended upward for such an extended time, the blips, and tumbles (such as in March of 2020) have been few and far between and relatively short lived.

That is, they are easy to forget about because things generally rebounded before the reality of what happened had a chance to sink in.

I often say this, and it is truer at this very moment than at any other: The #1 value we bring to clients doesn’t come in the form of investment returns or money saving tax planning or budgeting or even plotting distributions (or any of a dozen other technical, financial, or economic decisions).

Nope. While those things are vital, none is the single most important thing we do.

The single most important asset that we provide to clients is, during times like these, when we help them resist the urge to make emotional or behavioral financial mistakes from which they can’t recover.  

So, how long is this likely to all last?

It could end tomorrow. Or it could last years.

Don’t make that your only consideration. 

Since 1945, from beginning to end, it has taken bear markets on average just slightly longer than a year to move from high point to low.[7] (With the market hitting its all-time-record high on January 4th, 2022, we are now almost six months into this downturn).

Once the downturn begins and officially becomes a bear (a loss of 20%, or more), as it has now, it has historically taken about two years to reclaim the ground that was lost. After that, the market has gone on to set a record high every single time.

Remember, if you sell now, you just locked in your losses.

No one … not you, not me, and not your next-door neighbor, no one likes the uncertainty and anxiety caused by a market downturn. Add to that, inflation, the vestiges of this never-ending pandemic, the war in Europe, and a lot of other political uncertainty and division, and, yes, it’s stressful.

Get outside and breathe some clean air every day. Remind yourself that we’ve been here before. And speak with your advisor to help you find perspective and gain clarity about what history shows us is likely a typical market cycle.

I’m not trying to understate this. It’s nerve wracking.

But history shows that this too shall pass.  

 

 

1 https://www.cbsnews.com/news/bear-market-stocks-recession-inflation-retirement-what-to-do-401k/?ftag=CNM-00-10aac3a

2 https://www.cbsnews.com/news/bear-market-stocks-recession-inflation-retirement-what-to-do-401k/?ftag=CNM-00-10aac3a

3 https://allworthfinancial.com/staying-the-course-through-volatile-markets

4 https://allworthfinancial.com/staying-the-course-through-volatile-markets

5 Russell Investments. 2021 Advisor Study. https://allworthfinancial.com/staying-the-course-through-volatile-markets

6 https://allworthfinancial.com/staying-the-course-through-volatile-markets

7 https://www.cbsnews.com/news/bear-market-stocks-recession-inflation-retirement-what-to-do-401k/?ftag=CNM-00-10aac3a

 

 

 

Give yourself an advantage. Sign up to receive monthly insights from our Chief Investment Officer, and be the first to know about upcoming educational webinars. You'll also get instant access to our retirement planning checklist.

Related Articles
See more articles
March 26, 2025 The Myth of Market Timing: How Emotional Investing Can Lead to Poor Outcomes

Is your ‘gut’ in charge of making investing decisions for you? Here’s why that’s a bad strategy.

Read Now
February 03, 2025 How to align your investment strategy with your retirement goals

As you approach retirement, your goals require more than just saving. Discover the power of a more tailored investment strategy.

Read Now
September 24, 2024 Alternative investments: The need-to-knows

Are alternative investments right for your portfolio? Allworth Partner Advisor Victoria Bogner, CFP®, CFA, AIF®, helps you answer the question.

Read Now
Allworth Financial logo
Talk with an Advisor Contact us
  • Services
    • Wealth Management
    • 401(k) For Employers
    • For Airline Employees
  • Working With Us
    • Why People Work With Us
    • Office Locations
    • FAQs
    • Our Fees
    • Client Login
  • About Us
    • Advisors
    • Our Leadership
    • Advisory Firm Partnerships
    • Allworth Kids
    • Careers
    • Form CRS
  • Insights
    • Workshops & Events
    • Podcasts
    • Financial Planning
    • Investment Management
    • Tax Planning

Newsletter

Subscribe to receive monthly insights from our Chief Investment Officer, and be the first to know about upcoming educational webinars.

©1993-2025 Allworth Financial. All rights reserved.
  • Privacy Policy
  • Disclosures
  • Cookie Preferences
  • Do Not Sell or Share My Personal Information

Advisory services offered through Allworth Financial, a Registered Investment Advisor

Securities offered through AW Securities, a Registered Broker/Dealer, member FINRA/SIPC. Check the background of this firm on FINRA's BrokerCheck.

HMRN Insurance Agency, LLC license #0D34087

Rankings and/or recognition by unaffiliated rating services and/or publications should not be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if Allworth is engaged, or continues to be engaged, to provide investment advisory services.  Rankings should not be considered an endorsement of the advisor by any client nor are they representative of any one client’s evaluation or experience. Rankings published by magazines, and others, generally base their selections exclusively on information prepared and/or submitted by the recognized advisor.  Therefore, those who did not submit an application for consideration were excluded and may be equally qualified.

1.  Barron’s Top 100 RIA Firms: Barron’s ranking of independent advisory companies is based on assets managed by the firms, technology spending, staff diversity, succession planning and other metrics. Firms who wish to be ranked fill out a comprehensive survey about their practice. Allworth did not pay a fee to be considered for the ranking.  Allworth has received the following rankings in Barron’s Top 100 RIA Firms: #14 in 2024, #20 in 2023 and #31 in 2022. #23 in 2021, #27 in 2020.

2.  Retention Rate Source: Allworth Internal Data, FY 2022

3 & 9.  NBRI Circle of Excellence and Best in Class Ethics:  National Business Research Institute, Inc. (NBRI) is an independent research firm hired by Allworth to survey our customers. The survey contains eighteen (18) scaled and benchmarked questions covering a total of seven (7) topics, and a range of additional scaled, multiple choice, multiple select and open-ended question and is deployed biannually. NBRI compares responses across its company universe by industry and ranks the participating companies in each topic. The Circle of Excellence level is bestowed upon clients receiving a total company score at or above the 75th percentile of the NBRI ClearPath Benchmarking database.  Allworth’s 2023 results were compiled from 1,470 completed surveys, with results in the 92nd percentile. Allworth pays NBRI a fee to conduct the survey.

4.  As of 1/1/2025, Allworth Financial, an SEC registered investment adviser and AW Securities, a registered broker/dealer have approximately $26 billion in total assets under management and administration.

5.  Investment News Best Places to Work for Financial Advisors:  Investment News ranking of Best Places to Work for Financial Advisors is based on being a United States based Registered Investment Adviser with a minimum of 15 full or part-time employees working in the United States and having been in business for over a year.  Firms who meet Investment News’ criteria fill out an in-depth questionnaire and employees were asked to take part in a companywide survey.  Results of the questionnaire and employee surveys were analyzed by Investment News to determine recipients.  Allworth Financial did not pay a fee to be considered for the ranking.  Allworth Financial has received the ranking in 2020 and 2021.

6.  2021 Value of an Advisor Study / Russel Investments

7.  RIA Channel Top 50 Wealth Managers by Growth in Assets:  RIA Channel’s ranking of the Top 50 Wealth Managers by Growth in Assets is based on being an active Registered Investment Adviser with the Securities and Exchange Commission with no regulatory, criminal or administrative violations at the time of the ranking, provide wealth management services as their primary business and have a two year growth rate of 30% based on assets reported on Form ADV Part 1 at the time of ranking.  Allworth Financial did not pay a fee to be considered for the ranking.  Allworth Financial received the ranking in 2022.

8.  USA Today Best Financial Advisory Firms: USA Today’s ranking of Best Financial Advisory Firms was compiled from recommendations collected through an independent survey and a firm’s short and long-term AUM growth obtained from public sources. Allworth Financial did not participate in the survey, as self-recommendations are prohibited from consideration, and all surveyed individuals were selected at random. Allworth Financial did not pay a fee to be considered for the ranking. Allworth Financial received the ranking in 2024.

Tax services are provided by Allworth Tax Solutions, an affiliate of Allworth Financial. Allworth Financial does not provide tax preparation services or advice.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

Important Information

The information presented is for educational purposes only and is not intended to be a comprehensive analysis of the topics discussed. It should not be interpreted as personalized investment advice or relied upon as such.

Allworth Financial, LP (“Allworth”) makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of the information presented. While efforts are made to ensure the information’s accuracy, it is subject to change without notice. Allworth conducts a reasonable inquiry to determine that information provided by third party sources is reasonable, but cannot guarantee its accuracy or completeness. Opinions expressed are also subject to change without notice and should not be construed as investment advice.

The information is not intended to convey any implicit or explicit guarantee or sense of assurance that, if followed, any investment strategies referenced will produce a positive or desired outcome. All investments involve risk, including the potential loss of principal. There can be no assurance that any investment strategy or decision will achieve its intended objectives or result in a positive return. It is important to carefully consider your investment goals, risk tolerance, and seek professional advice before making any investment decisions.