Does a market downturn indicate a down year? Wealth Adviser Clarke Holt answers this question today on Elevate Wealth.

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FULL TRANSCRIPT:
Last week, someone asked me: "Do downturns lead to down years?" I thought about it, and here's my takeaway. So stock declines over a few days or months might lead investors to anticipate a down year, but the US market has had positive returns, even despite some noticeable dips in many of those years, and intra-year, or during each calendar year, declines for the index can range from 3% up to 49%. Many years that had large intra-year decline saw positive annual returns, and in 17 of the last 20 years, US stocks ended with a gain for the year. Volatility is a normal part of investing, and tumbles can be scary, but they shouldn't be surprising. And if you look at the S&P 500, which is a broad-based basket of US stocks, it had an annualized return of around 11% from 1980 through December 2020. In every calendar year you would have experienced declines, and sometimes significant declines, along the way. However, over that length of time the number of positive returns equaled 34 out of 41, so you are rewarded for staying the course and exercising patience and discipline. Lastly, timing and forecasting market movements is so difficult and can result in deterioration of your wealth, so it is much better for investors to stick with their long-term plan and have a positive experience over time. If you need help staying the course, we'd be glad to help. Schedule a free consultation with us. Just visit elevate-wealth.com and click the "Let's Talk" button. Thanks!

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