Markets sour from time to time. It`s inevitable. From 1900-2014 there have been 32 US based stock bear markets (defined by a decline of 20% from peak to trough), occurring about every 3.5 years. The average length of each is approximately 367 days depending on who you ask, but more importantly, some last longer.
On the flip side, these markets are followed by a bull run which is typically more protracted however, much of the gain usually occurs in the early days. An example of this would be the S&P hitting 777 in October 2002, and then rallying up 15.2% in one month....something you would not want to miss.
So what do these numbers teach us.....
1- understand your objectives and your risk tolerance. While it may not matter when it`s good, it certainly will when it`s not good
2- if you are accumulating, stick to the strategy. Buying low will automatically occur if you are averaging in over a period of time. It is all in the numbers.
3- for goal specific savings, plan appropriately and know the timeline. Anything inside a few years deserves a very conservative strategy. Otherwise you may be sorry when it comes time to pay.
4- Advice is valuable. Returns are one thing but protecting against a protracted and steep decline is entirely another. When things are headed south and you are find that you are largely protected, that is when you know you are getting good advice.
I found this article in the FP which echoes some of my comments above
click here for the read.