If a Bear Market Is Coming, History Says This 1 Investing Decision Will Make or Break Your Portfolio
Never give up on stocks during a bear market.
Overview
Investing in the S&P 500 (SNPINDEX: ^GSPC) via a low-cost exchange-traded fund (ETF), like Vanguard's S&P 500 ETF (NYSEMKT: VOO), is a sound long-term strategy. The benchmark index has generated an average annual total return of about 10% since its inception in 1957, outperforming most individual stocks and actively managed funds over the long term.
But since 1957, there have been ten official bear markets -- peak-to-trough declines of at least 20% -- which occurred every six to seven years. The average bear market only lasts nine to ten months, but those steep downturns drive many investors out of stocks. So if you expect the next bear market to happen in the near future, the best move you can make is to sit still and weather the storm. Let's see why that crucial investing decision could make or break your portfolio.
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Originally published at www.fool.com.