Business confidence may be down and the economy on the wane, but the good news is that with a little perspective, the current downturn isn’t as bad as it seems.
An analysis conducted by Zenith Investment Partners on the last five bear markets has revealed that the average declining period lasted 16 months with an average recovery period of 33 months to surpass the previous market high.
While Zenith calculated the average decline during a bear market at 37 percent, with the worst decline 55 percent from 1973-1974, the share market return six months from the end of a bear market was 28 percent, with gains of 62 percent, or 17.4 percent per annum, in the three years following.
The analysis confirms the view that investors should take a medium to long-term view, beyond seven years, when buying shares, and should be prepared to hold onto them in good times and bad.