Business headlines have recently been filled with negative news which begs the question – Can I avoid the potential upcoming downturn?
To answer, it helps to examine history. The chart to the left shows market corrections and recoveries for the S&P 500 (top 500 US companies) over the last 77 years. On average, a market correction takes 6.5 months to bottom and the subsequent recovery is quicker at 4 months.
This makes a move to sell long term investments (often incurring capital gains tax) and entering at a future lower price tempting but very difficult in reality as markets often recover much faster than anticipated and it is logically difficult to buy when news is bad (in down markets). 
In the last 30 years to 2021, 78% of the 50 best return days for the S&P 500 have occurred during the correction and the first two months of the market recovery.
Missing the best days has a dramatic effect on long term returns. An investor who missed the 10 best return days for the S&P 500 over the last 30 years, got 54% lower return and if they missed the 30 best days an 83% lower return.
So how can we best protect ourselves during times of volatility?
- Maintain a well thought out and considered strategy to capture market returns.
- Minimise costs and taxes by matching investment with life goals. Hold deposits for near term needs.
- Maintain a broad spread of investments to reduce the risk of permanent capital loss; and
- Stay the course & be patient. Increased trading does not equate to better returns.