September 23, 2022

For many investors, the volatility we have seen over the past few weeks has many considering if it is time to sell their stocks and move to cash.

A Portfolio During Volatility

During periods of volatility like we are seeing now, timing the markets may be tempting. But it brings up several problems. We have seen over and over that trying to time the markets brings up two separate decisions. The first is selling and moving to a position like cash. This is easy to do when the markets are volatile. The second decision is when to get back into the market with a balanced portfolio. This decision is very difficult and leads to many missing some of the best percentage gaining days in history.

The chart below shows the overall impact of missing just one or more of these days with large gains.

Long-term investors have seen many recessions and geopolitical events that have had short- term effects on stock returns. But, when looked at over a longer period, stock returns have recovered from short-term declines. The chart below shows the growth of $1,000 invested in the Wilshire 5000 through 7 recessions, Federal Funds rates as high as 22% in 1980, the 9/11 terrorist attacks, the Great Financial Crisis of 2008, and a global pandemic. When we use history as a guide, the stock market has proved very resilient through many events that seemed very important at times.


One thing we are certain of, while we cannot guess when this market correction will end, history has proven it’s going to recover as evidenced by the charts.

Timing in the market has not worked in the past and will not work in the future, of this we are confident.

As always, we are available for any questions about the short-term volatility we are seeing, concerns about rising interest rates and any other questions or concerns.

“The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.” – Benjamin Graham

Gregory, Gabriella, Brian, Samer, and Chris

Prato Capital: Where Integrity Meets Discipline

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