As mainstream financial firms and advisers urge everyone to hold and hope as prices plunge, the question each client should be asking them is, “For how long? How long will it take to recover my losses?”
The secular bear that began in 2000 has already inflicted two 50% declines for broad stock markets, and the historic over-valuations reached on QE mania into 2014 have baked in the likelihood of a third similar decline this time. It took 5-7 years before prices were able to recover the highs hit before the last two bear markets: that is, five to seven years in order to recover losses and accomplish zero gains.
So if central banks are already out of bullets coming into this third cyclical bear market, the question has to be, “How long will it take prices to recover my losses this time? Will I have to wait until I am 60? 70? 80?” Does their plan seem wise given your life expectancy?
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