What to Do When Markets Drop

If you’re a long-term investor, you’ll almost certainly experience a bear market from time to time. Bear markets occur when the Dow Jones Industrial Average drops 20% or more. But not all market drops are that severe. The market can dip 5% or more at least three times a year on average. You can expect a drop of 10% or more – known as a correction – about once a year. And the bear reappears every three to four years on average.*

When stock prices begin falling dramatically, the impulse is to do something. Anything. 

You may think your only option is to sell in order to limit losses. We disagree

If you’re a long-term investor, what you do during a stock market decline might spell the difference between success and failure.

We recommend staying calm and ignoring extreme predictions of doom and gloom.

Here is your survival checklist:

• Stay the course. Stock market declines are normal and frequent – not a reason to sell quality investments.

• Look for opportunities. Market drops can present opportunities to buy stocks and equity mutual funds at lower prices.**

• Stick with quality. Lower-quality investments may not recover when the bear market ends.

• And finally, talk to a trusted financial advisor.

Prepare your portfolio today with an appropriate mix of quality investments so that you can stay invested in both bear and bull markets over time.

Always remember: 

Stock markets declines are common, occur without warning, end unexpectedly and may present opportunities for long-term investors to buy stocks and quality mutual funds at lower prices.

Want more information?

Visit an Edward Jones financial advisor. He or she will work with you to build an investing strategy that fits your needs today and into the future, no matter which direction the market is headed.

Or to discuss a personalized investment strategy for you, please use our locator to find an Edward Jones financial advisor near you. https://www.edwardjones.com/find-fina...

* Source: Ned Davis research, 1/2/1900-12/31/2016.  Past performance is not a guarantee of future results.  The Dow Jones Industrial average is unmanaged and is not meant to depict an actual investment.

Copyright 2017 Ned Davis Research, Inc. All rights reserved. Further distribution prohibited without prior permission.

**Investing in stocks and equity mutual funds involves risk. The prices of your shares will fluctuate and you may receive more or less than your original investment when you sell your shares.