“The most important lessons learned in investing are learned in the tough times.
~Howard Marks
Bear markets are inevitable.
If you are eighty-five, you have seen 14 and if you are forty, you have seen 5.
This chart tells how many bear markets occurred in your lifetime:
This next chart highlights some historical declines in the S&P500.
- Note that the S&P500 Index fell as much as 36%, 48%, 49% and 57%
- Bear markets were followed by long recovery periods – even several years
See the magnitude and duration of the declines and eventual recoveries:
Source: Bloomberg, calculations by Horizon, S&P 500 data as of 06/27/25.
Here is the true difficulty in buying and holding merely a stock index – very few investors can handle that much volatility and multi-year recoveries. Could you handle a 49% and 57% reduction in your savings twice in one decade?
Well then, what important lessons must we learn about investing?
- Maintain a balanced, diversified, and disciplined investment process
- Consider additional portfolio strategies to protect your wealth
- Design your investment portfolio for full market cycles
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“An effective risk mitigation strategy should be highly responsive and able to re-engage with markets quickly as they move higher.”
~ Mike Dickson, Ph.D.
