Watching the investment markets, it may feel like you’ve been hit with a bucket of cold water. COVID-19 has impacted us in many ways, disrupting how we live each day.

You may feel that you have no control. In fact, you do – particularly, the power to stay invested.

There may be a temptation to sell your holdings. However, doing nothing can be the best plan of action.

Stocks have a history of long-term gain

History has shown that, while stock markets rise and fall, there is good news when looking at the long term. Markets go up more than they go down. Now is the time to focus on the long term and stay invested.

If you were investing when the financial crisis hit in 2008, you’ll know that, while stocks dropped overall by about 50 percent, they rebounded into a long-running bull market (a period of rising stock prices). This period resulted in strong gains for investors, especially those focused on the long-term.

If you are newly invested, you will have likely enjoyed the market gains and may not have had the experience of weathering the downturns.

The lesson history has taught us is clear. When you stay invested, the gains outweigh the losses.

There have been 13 bear markets (a period of falling stock prices) since World War II. Every one of them has turned into a bull market that provided gains for investors. Historically, periods of bull markets have typically lasted about three times longer than periods of bear markets so, over the long term, you have more times of upside to make gains.

Over the past 60 years, the Canadian stock market has delivered an annual return of more than 20 percent – nine times more often than it showed a decline of that amount.

What you shouldn’t do

The big picture is positive. Still, it’s natural to feel rattled by everything that is going on these days, especially when we consider our financial health. What can we do to make us feel we are on safer footing?

When we look at how investors respond to the market, there are three behaviours that can lead to poor investment performance, identified by the U.S. research firm Dalbar.

1. Loss aversion – our natural fear of losing money that can prompt us to withdraw capital at the wrong time when markets are falling.
2. Anchoring – the tendency to believe that events and conditions from the recent past overshadow lessons from older events.
3. Herding – if others are selling their investments, we might anxiously follow their lead.

The bottom line is while it might feel scary, you must be willing to accept the bad days as well as the big, positive days when you have made significant gains — by staying invested. Doing so pays off in the end.

What you should do

There are ways to limit your losses over the long term and provide you with a smoother investment journey:

1. Having a diversified portfolio is an important risk management strategy that can help you ride out downturns. It spreads the impact and ensures holdings can offset those that are fluctuating.
2. The longer your investment time horizon is, the higher the opportunity of getting positive returns through good times and bad.
3. Having a well-diversified portfolio that fits your goals, time horizon and tolerance for risk is the best way to ensure your financial health during these times of uncertainty.

With all of this in mind, these simple points are helpful reminders when the market takes a turn:

• To enjoy the best days of the market, you should stay invested, through good times and bad.
• Historically, markets go up more than they go down.
• There are many more good periods than bad ones.
• Having a diversified portfolio is an important risk management strategy that can help you ride out downturns.
• The longer your time horizon for investing, the more likely you will reap the rewards.

Perhaps these points will become your new mantra over the next few weeks, or even months. While no one knows for certain what the markets will bring, you can trust that with these points as your guide, you can weather whatever storm comes your way - and maybe even come out ahead. And for those days when you just need a reassuring voice, know that your Servus advisor is always available to talk through your situation and help you stay the course.