Today’s investors need more defensive tools to navigate the challenges of an ever-changing market

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“Buy and hold” is only one strategy

“Buy and hold,” simple asset allocation, and traditional portfolio construction may not be enough to keep investors on track toward their financial goals during volatile or severe bear markets (sustained down markets with losses of more than 20%). “Riding out” the ups and downs of the market and relying only on basic forms of diversification could leave investors vulnerable to the risks described below and with fewer tools to take advantage of opportunities for growth.

Are your clients prepared for these market risks?

Market history by the numbers


Between 1929 and 2022 there have been 17 bear markets, defined as those periods when the S&P 500 has fallen at least 20%.


The average bear market slashed almost 34.8% from stock prices. Omit the ’29 crash, when values declined 87%, and the result is still an average loss of 29.7%.


On average, a new bear market begins every 5.8 years, with an average duration of 16.6 months. Omitting the distortion of the 1929 crash, the average time lost making up bear markets (zero returns): 3.4 years.

Mathematics of declines and gains

“Riding out” severe market losses means investors will need more gains just to get back to breakeven. This is especially difficult for those who are in or near retirement or who are taking withdrawals.

Amount of market decline Gain needed to break even
-5% 5.3%
-10% 11.1%
-25% 33.3%
-33.3% 50%
-50% 100%
-75% 300%
-90% 900%
This illustration from Guggenheim Investments shows the efficient frontier by decade since 1960. As this chart shows, market conditions change constantly. A static portfolio created in one decade may not be appropriate for the next.
1Standard Deviation: A statistical measure of the historical volatility if an investment, usually computed using 36 monthly returns. More generally, a measure of the extend to which numbers are spread around their average. The higher the number, the more volatility is to be expected.
Source: Calculated by Guggenheim Investments using data from Morningstar Direct for the period prior to 2011 and FactSet for 2011. All rights reserved. Used with permission. Performance displayed represents past performance, which is no guarantee of future results. This example is for illustration purposed only. The chart above depicts the efficient frontier of equity and bond portfolios illustrated in 10% increments. Equity returns are based on the returns of the S&P 500® Index, which includes the reinvestment of dividends. Bond returns include the reinvestment of dividends and are based on the Barclays Capital Aggregate Bond Index. The S&P 500® and the Barclays Capital Aggregate Bond Index are unmanaged and not available for direct investment. The index returns do not reflect any management fees, transaction cost of expenses.
Securities are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involved investment risks, including the possible loss of the principal amount invested.