Lessons from the past

April 28, 2020

Lessons from the past
 

A true long-term investment perspective should include both the future and the past. By taking into account events that shaped the markets and their subsequent recoveries, we can learn from patterns of the past and maintain perspective about the future.

From a historical perspective, investors who fled the equity market to ‘de-risk’ or attempt to time the bottom may have missed out on potential market snapbacks after the bottom eventually was hit. Historically, equity markets have averaged almost 30% in the first six months following the lowest point of a cycle. Time is the greatest diversifier and investors should aim to practice discipline, not heroism.

Timing any market is extremely difficult–timing the bottom of a bear market is nearly impossible. Dislocations are uncomfortable, but they have been historically temporary. If history alone is any indication, markets should eventually rebound. But there will continue to be uncertainties and volatility along the way.

Liz Young, CFA, Director of Market Strategy, BNY Mellon Investment Management

All investments involve risk, including the possible loss of principal. Certain investments involve greater or unique risks that should be considered along with the objectives, fees, and expenses before investing. Charts are provided for illustrative purposes and are not indicative of the past or future performance of any BNY Mellon Investment Management product.

Charts are provided for illustrative purposes and are not indicative of the past or future performance of any BNY Mellon product.

Index returns are for illustrative purposes only. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.

The Standard & Poor's 500 (S&P 500) Composite Stock Price Index is a widely accepted, unmanaged index of U.S. stock market performance.

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Views expressed are those of the advisor stated and do not reflect views of other managers or the firm overall. Views are current as of the date of this publication and subject to change. This information contains projections or other forward-looking statements regarding future events, targets or expectations, and is only current as of the date indicated. There is no assurance that such events or expectations will be achieved, and actual results may be significantly different from that shown here. The information is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. Forecasts, estimates and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. Please consult a legal, tax or investment advisor in order to determine whether an investment product or service is appropriate for a particular situation. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. BNY Mellon Securities Corporation is a subsidiary of BNY Mellon.

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