“Patience and length of time are more than strength or rage. » La Fontaine was not thinking of stock market crises, but of the moral of his fable The Lion and the Rat sounds like wise advice to 21st century saversand century tempted to sell their entire portfolio when the stock market plummets. Because, in the absence of being able to avoid crashes, it is reasonable to learn to be patient while they pass. “Nobody is able to predict the beginning of a crisis, nor its duration or its magnitude”recalls Emmanuel Roulin, author of the book Slow Money. What if you became your best financial advisor? (self-published, 176 pages, 19.50 euros), who has also been a market professional for thirty years.
What is certain is that “in the long term, the crashes disappear”, recalls the economist Marc Touati, president of the ACDEFI cabinet. A historical reality that investors sometimes forget when, in the heart of the storm, seeing their portfolio lose 10%, 20% or even 30% of its value in a few days or a few weeks, they panic and sell their securities. A hot reaction that we must try to fight. “Of course, taking a crisis head on when you have just invested is painful. But selling and deciding that we will never invest in the stock market again is a mistake, because over more than ten years, the probability of losing money is extremely low.analyzes Mr. Touati.
“Selling is the best way to miss the market rebound, because the best and worst trading sessions are statistically close in time”, adds Albert d’Anthoüard, director of private clients at Nalo. And despite the crises, actions remain essential in a diversified portfolio: “The global stock market indices show an average annual return of more than 5%, even going to 8.5% for the American S&P 500 index, over the last thirty-one years. Equity investing significantly outperforms other asset classes”confirms Mr. Touati in a study published in January 2022 (“Regular investment in the real economy: a decisive asset for young people and for France”).
A perception worse than reality
To try to reason coolly rather than nervously, remember that all crises come to an end. An indicator even makes it possible to measure the speed of recovery of a market after a crisis: the “recovery time” measures the number of days or months necessary for an index to return to its pre-crisis level. A way to objectively assess the seriousness of a crisis after the fact. Because the perception of a crash is sometimes much worse than its real impact.
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