Should You Sell Your Stocks?
August 14, 2022
Recent stock market returns have been very poor.
One, should this be of concern and is it time to sell stocks? Two, is this just a normal part of investing and should you remain invested?
Stock market returns have generally rewarded long-term investors that stayed invested during both good and bad times.
One of the realities of owning stocks is some years returns have been very disappointing. That is an underlying factor why long-term investment returns from stocks have been so strong.
Investing in stock can come with some risk.
Bond returns are lower than stock returns over long periods of time. There is a relationship between risk and return.
After a stock market decline of 10 per cent, the average cumulative return over the next one, three and five years was strong; specifically, 13, 35 and 69 per cent.
After a stock market decline of 20 per cent the returns were 22, 41 and 72 per cent. After a stock market decline of 30 per cent the returns were 24, 16 and 50 per cent. This information comes from the Family/French Total US Market Research Index from 1926 to the present. All numbers have been rounded.
Past returns and future expected returns over a long period are as follows. Stock returns generally are higher than bonds and they are usually more volatile than bonds.
That is the reason why most investors own both stocks and bonds allocated according to their specific situation and financial objectives.
Peter Watson is registered with Aligned Capital Partners Inc. (ACPI) to provide investment advice. Investment products are provided by ACPI. ACPI is a member of the Investment Industry Regulatory Organization of Canada. The opinions expressed are those of the author and not necessarily those of ACPI. Only investment-related products and services are offered through Watson Securities of ACPI. Peter Watson provides wealth management services through Watson Investments. He can be reached at www.watsoninvestments.com
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