With the collapse of Silicon Valley Bank, the hit to financial sector stocks has been brutal. As a reference, the iShares U.S. Regional Banks ETF (IAT) dropped by more than 30% in a few days. During a follow-up webinar with my newsletter subscribers, I discussed how steep market corrections have been showing up more often…
And how market drops like these are by far the best way to build your income and wealth.
Let me show you…
Psychologically, it’s hard to watch the value of your portfolio go down for an extended period. A ten percent drop is uncomfortable. If prices drop by 20%, fear takes over, and many (most) investors bail out, locking in their losses. They don’t often understand that steep declines occur about every other year. Using the S&P 500 benchmark, here is a quick history:
- September to December 2018: The market took 95 days to drop by 19.8%
- February to March 2020 (the pandemic): The market took 33 days to lose 33.9%
- January to June 2022: It took 164 days to drop by 24.5%
The 2022 bear market, from which stock prices have not yet recovered, hit a lower low in October, but the period from June 2022 until the present has been marked by failed recoveries and modest declines.
This year, the banking sector crashed, which—as I noted above—took down the regional bank ETF by more than 30%. That crash affected the full range of financial business companies, including business development companies (BDCs) and real estate investment trusts (REITs).
In less than four and a half years, investors have gone through…
Continue reading at INVESTORSALLEY.com
