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The Critical Market Recovery Lesson of 2020

I’m sure 30 years from now the sting of 2020 will have faded, but there are a few things I hope we never forget. Some are even good things! Specifically, I am referring to the most amazing market recovery we have ever witnessed.

Would you believe that, after enduring a 34% market decline in February and March, as of July 10, 2020, the market is up 6% over the past 12 months? Year-to-date, the market is only down 2.6% (using the S&P 500 as our market proxy).

It’s hard to believe all but 2.6% of 2020’s losses (to date) were recovered in just 2 months and 16 days. According to the USDA, you can safely keep eggs longer than that! One of the most important investment lessons of your life just happened and if you blinked, you missed it. Many times, a risk-averse client has told me, “I don’t have time to wait for recoveries.” My response (pointing to the 2020 stock chart) is, “No, you don’t have time to miss recoveries.”

What do I mean by “You don’t have time to miss recoveries”? What I mean is–in a matter of just 10 weeks–we have witnessed the market produce 3 years’ worth of average returns. An investor who panicked, sold at the bottom, and waited just 10 weeks before getting back in, gave up the equivalent of 3 years’ worth of their investment time horizon.

Abraham Lincoln was right when he said it is “not best to swap horses when crossing streams.” The market decline and recovery of 2020 illustrates just that. Without question, the best strategy has been to ride it out. If you find yourself in the middle of the stream without a solid grip on your mount, do not waste another minute. Call and schedule a consultation with an HFG Trust advisor today.


This memorandum expresses the views of the author as of the date indicated and such views are subject to change without notice. Community First Bank, HFG Trust, and HFG Advisors have no duty or obligation to update the information contained herein. Further, Community First Bank, HFG Trust, and HFG Advisors make no representation, and it should not be assumed that past investment performance is an indication of future results. Moreover, wherever there is potential profit there is possibility of loss. This memorandum is being made available for educational purposes only and should not be used for any other purpose. The information contained herein does not constitute and should not be construed as an offering of advisory services, banking services, or an offer to sell or solicit and securities or related financial instruments in any jurisdiction. Certain information contained herein concerning economic trends and performance is based on or derived from information provided by independent third-party sources. Community First Bank, HFG Trust, and HFG Advisors believes that the sources from which such information has been obtained are reliable; however, it cannot guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based. This memorandum, included the information contained herein, may not be copied, reproduced, republished, or posted in any form without the prior written consent of Community First Bank and/or HFG Trust and/or HFG Advisors. HFG Advisors, Inc, is a wholly owned subsidiary of HFG Trust, LLC. HFG Trust, LLC is a Washington state-registered Trust company and wholly owned subsidiary of Community First Bank.