CAISSA’s Investment Update: Chart of the Month
Market Downturns and Recoveries
The chart below is a great example of why we apply our Tranches of Income strategy to our asset allocations. Going back to the Great Depression, there have been 15+ major downturns in history. Only three of these downturns took more than 36 months to recover (one of which WAS the Great Depression). The others averaged about 18 to 36 months.
The Great Recession of 2008 only lasted 16 months, but to most investors it felt like ETERNITY. It then took about three years for people to make their money back. The whole process lasted about five years from start to finish. That’s why at CAISSA, we ALWAYS keep about 5 to 7 years of withdrawal needs earmarked in short term instruments. It may feel a little boring, but that’s the point! When the next market downturn happens, our clients will have the assurance that they will still meet their cash flows needs.
Even if you’re not retired, you can still rest easy because downturns are natural… but so are recoveries!