In his latest presentation titled – The Mindset Required to Navigate Crises and Uncertainty, Chris Davis provides a great illustration of the insanity of market panics. Here’s an excerpt from the presentation:
Davis: Let’s think of the really bad thing. You know, the thing your clients may be terrified of. What if I’m down 10% over some period of time. Now, we might say that’s not so scary but it has a big impact on client behavior.
And you know roughly 12% of all rolling one year periods the market was down more than 10%. If you take that to five-year periods, the market was down more than 10% after a rolling five year period in only 3% of the time, and none for the ten years.
So people panic, people get enormous fear when the market’s down 10/20 percent because they picture it continuing in perpetuity.
You can watch the entire presentation here:
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