The theme this week on the Retirement Quick Tips Podcast is the Deadly Sins of Investors In Bear Markets.

Today, I’m talking about the most dangerous mindset that an investor can have during a bear market, and that is: 

This time is different. 

This time is different. It’s easy to fall into the trap of thinking “this is it. This is the next great depression. I’m going to be wiped out if I don’t get out, so I need to cash out now and keep my powder dry until I can make sense of the world again”.

If you go back to all of the last severe bear markets, you see a common pattern, and yes, each time was different. 

When the tech bubble burst, entire companies went up in smoke overnight. During the great recession of 2008, the entire banking system was teetering on the edge, near collapse. Many people lost their homes, and unemployment exceeded 10%. 

When Covid hit, the stock market lost ⅓ of it’s value in just a few short weeks, and now in 2022, we’re trying to cope with higher inflation than many Americans can even remember. I wasn’t even born yet the last time inflation was this bad. 

So yes, this time is different. The circumstances are always different, and it’s what makes predicting the next downturn so impossible. But there’s an old saying that’s critical to remember whenever you’re tempted to think this time is different: 

History doesn’t repeat itself, but it does rhyme. 

The circumstances are different, but the stock market and economic fallout are similar, and most importantly, the recovery always comes. 

As long as you still believe that the US economy will recover, businesses will recover, there’s no reason to fall into the temptation of thinking this time is different. That thinking will only cause you to sell into the teeth of the downturn and perhaps never recover from that decision. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

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