“History Doesn’t repeat itself but it often rhymes”
– Mark Twain
The quote above is one of my favourites and is relevant to the recent downward cycle and volatility we have seen in the stock markets.
For the first time since 2011 (some of you since 2008), your 2018 fund statements will be showing a negative return. Negative returns are never pleasant however, they are a normal and necessary occurrence in the investment cycle.
Over the past 30+ years, I have experienced at least 5 down cycles and to paraphrase Mr. Twain, here are some historical “rhymes” that have been constant with your funds:
- Negative returns come, on average, about every six years and usually last only one year;
- Periods of negative returns were followed by much longer and larger periods of investment growth; and
- Even in negative years the 5+ year average return of your funds remained positive.
As expected, media experts who were telling us 6 months ago that the market growth would be going on forever are now full of gloom and doom. They cite tariff wars, political issues, world unrest, etc. – all of which were issues long before this recent downturn and will be with us long after we enter our next growth cycle.
I always encourage my clients to do their own research and go back to previous down cycles in the market and economy (1987, 2000-2003, 2008) to read the news of the day and also to track the growth cycles that followed. It provides a much better perspective than relying on media, experts, friends and colleagues.
I am not saying you have to be thrilled when you read your statements, however, try and remember what got you here and for our newer clients, where your fund will likely be trending.
For many of you, the Guaranteed Income options attached to your accounts will continue to grow and/or produce a lifetime income and are not affected by current or future market volatility.
For those of you interested in finding out about these guaranteed growth and income option, contact us at 1-800-665-7707 or email firstname.lastname@example.org.