Despite contributions totaling thousands of dollars so far this year, since January 1, the value of my investment portfolio is down 10%. That’s enough of a decline to make anyone consider giving up on the stock market. It’s an understandable point of view.
My 401(k) offers an automated interview to help you choose your asset allocation. Several questions resolve around the comfortability during losses. When the stock market has been in an upward trend, it’s a lot easier to say you’d be willing to experience a 20% decline over one year. However, during a bear market, those who believe they are suited for aggressive and risky investing are put to the test.
Do you cut your losses? Is it time to reconsider your long-term strategy?
I don’t think so. I’ll be sticking with my plan. If you have several decades to retirement, the stock market should continue its upward trend. In fact, staying the course and buying smartly during a bear market provides the opportunity for bargain-hunting.