Time Is The Best Resource

We look back nearly a century and analyze time in the market, the duration and frequency of bull and bear market cycles, and talk pea pods.

You've likely heard of the 80-20 rule, also known as the Pareto Principle, named after the Italian economist Vilfredo Pareto. It's a familiar saying that asserts that 80% of results come from just 20% of an event's inputs.

At its core, the 80-20 idea is about identifying the best resources to create maximum value. For example, Pareto noticed that 20% of the pea pods in his garden were responsible for 80% of the peas.

When it comes to investing, it's easy to think of a diversified portfolio as "the best resource." And indeed, it is part of the equation. Likely a prerequisite.

But, here's the thing, time. It is time which is our best resource.

Year-to-date markets are down around 23 percent. This percentage decline is consistent with prior bear market cycles. And while we prepare for times like these through bucket-based retirement planning, they can still be unsettling.

However, looking back 96 years, we calculate that 88 percent of the time, we're in a bull market. Stocks are performing positively. On average, bull market runs have lasted around 6.7 years, and bear market declines around 1.2 years. These numbers shouldn't imply a target date for being done with this current decline.

What history teaches us, we believe, is that time in the market is more important than timing the market. The shift from market bottoms to the start of the next bull market advance can be dramatic. As investors, we don't want to miss out when the tides turn.

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