Different Investing Approaches to a Market Downturn
Many investors will recover in no time from even a drastic market crash, but advisors whose clients are retirees or getting close should take a safer approach, according to SeekingAlpha.
The long-term negative effects of the market crash of 2008, severe as it was, were negligible, SeekingAlpha says. Within three years, most investors who stayed in recouped their losses, and the market has continued upward ever since. Those who ducked out missed the trip north (to whatever extent they stayed on the sidelines), the publication says. And while advisors shouldn’t bet on upswings this long in the tooth, it’s still reasonable to expect a long-term return for taking on risk.
And so it’s prudent to take “a philosophical approach” to investing and take the long-term view of risk and portfolio performance, the publication writes — at least it is for investors who aren’t withdrawing from their retirement savings accounts. For those who are, capital preservation should be the top priority, says SeekingAlpha.
So instead of a philosophical approach to risk with such clients, advisors should be taking a more pragmatic approach, the publication writes.