It’s possible to profit from patience. It’s nearly impossible to time the market and identify its peaks and troughs but if history is any guide, short-term drops in the stock market are typically followed by longer-term rallies.
Stay invested for market recoveries
Market volatility surged following the Trump administration’s announcement of a broad range of harsher-than-expected tariffs, which has fuelled concerns around the potential for slowing economic growth, resurgent inflation, and a possible recession. This has impacted stock markets across the globe.
But history shows us that after a drop of at least 10% (referred to as a ‘market correction’), the stock market typically rebounds within three to six months. And in two out of three bear markets, defined by a drop of at least 20%, stocks returned to previous levels within a year.
While it is impossible to predict what happens from here, staying focused on your long-term investment goals and maintaining a diversified portfolio can help you navigate periods of uncertainty and benefit from eventual market recoveries.
Don’t let volatility change your plan, market volatility is a given. Short-term downturns can be worrying, and they may heighten anxiety among some investors. If the stock market’s historical trends hold true, a patient investor who outlasts short-term volatility can benefit over the long term.
If you’re unsure where to begin or need help, we recommend speaking with a financial adviser. Personalised advice can give you the confidence you need to achieve your financial goals.
Source: T. Rowe Price Australia Limited (ABN: 13 620 668 895 and AFSL: 503741). See Additional Disclosure