In uncertain times, turning to history can help make the path forward a little clearer. So let’s look at how a portfolio would have performed over 40 years based on an investor’s response to three crises.

In uncertain times, turning to history can help make the path forward a little clearer. So let’s look at how a portfolio would have performed over 40 years based on an investor’s response to three crises.
Below are three typical paths that an investor might have taken during significant downturns. Each direction led to starkly different results. An investor started with $100 and contributed $5,000 annually to their savings over 40 years. When the S&P 500 Index dropped 30%, their reaction was to ...
On Black Monday in 1987, the US stock market dropped by 23% in a single day.
During the rise of the internet, many tech companies were overvalued—causing a bear market.
The Mortgage Crisis helped trigger the most severe economic meltdown since the Great Depression.
Historically, the market has always bounced back, but that doesn’t mean the impacts aren’t real and long lasting. However, it’s important to see the big picture and act rationally. But also, know that you’re not alone—a financial professional can help you keep your emotions in check so you can make better choices for your financial future.
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Source Info and Disclosures — Portfolio value is calculated using weighted average return of respective asset classes. Asset classes used in portfolio are cash and equity. Returns for these asset classes are estimated based on representative indeces (Cash: U.S. Treasury three-month Treasury; Equity: S&P 500 Index). Investment strategies used are: Panic and Pull: Portfolio starts with 100% equity investment; Moves 100% to cash if drawdown >=30%; never moves back to equities. React and Wait: Portfolio starts with 100% equity investment; moves 100% to cash if drawdown >=30%; Moves 100% back to equities when 12-month realized volatility <=20%. Stay Invested: Portfolio starts with 100% equity investment; allocations do not change for entire investment horizon.
Equity Bear Markets:
Black Monday: October 1987-September 1988
Dot-Com Bubble: March 2001-October 2003
Global Financial Crisis: December 2007-June 2009
Past performance does not guarantee future results. Indices are unmanaged and are not available for direct investment.
This is a hypothetical illustration; actual results may vary.
Any type of continuous or periodic investment plan does not assure a profit and does not protect against loss in declining markets. Since such a plan involves continuous investment in securities regardless of fluctuating price levels of such securities, the investor should consider his/her financial ability to continue his/her purchases through periods of low price levels.
© 2020 Morgan Stanley Smith Barney LLC. Member SIPC.
CRC#3073782 (5/2020)