Trustnet Magazine 77 October 2021 | Page 58

Performance of index since 2020 bottom
YOUR PORTFOLIO
Bottoming out

Performance of index since 2020 bottom

S & P 500 ( 65.6 %)
80 %
70 %
60 %
50 %
40 %
30 %
20 %
10 %
0 %
-10 %
Apr20
Jun
Aug
Oct
Dec
Feb21
Apr
Jun
Aug
Source : FE Analytics
effect or wave , with the 1929 market crash serving as a prime example . It precipitated an economic crisis , known as the Great Depression , which proved to be the worst economic downturn in the history of the industrialised world , lasting for a decade .
False bottoms Coombs points out investors can buy in at the bottom of the market , but it may not necessarily be the bottom for a specific stock . “ This nuance is important ,” he adds . For example , many investors bought bombed-out tech stocks after the dotcom crash , only to find their share prices fell even further before ultimately going bust . In spite of these risks , history has shown there is much to be gained by investing after a crash , but it requires patience , discipline and bravery . Coombs says the key is to think in advance about how you would respond to a 20 to 30 % market fall . It is then a case of making a plan and , most importantly , sticking to it . In the event of such a crash , he advises investing a pre-determined percentage of cash straight into the market .
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