Chris Davis: The Insanity Of Market Panics

In his latest presentation titled – The Mindset Required to Navigate Crises and Uncertainty, Chris Davis provides a great illustration of the insanity of market panics. Here’s an excerpt from the presentation:

Davis: Let’s think of the really bad thing. You know, the thing your clients may be terrified of. What if I’m down 10% over some period of time. Now, we might say that’s not so scary but it has a big impact on client behavior.

And you know roughly 12% of all rolling one year periods the market was down more than 10%. If you take that to five-year periods, the market was down more than 10% after a rolling five year period in only 3% of the time, and none for the ten years.

So people panic, people get enormous fear when the market’s down 10/20 percent because they picture it continuing in perpetuity.

You can watch the entire presentation here:

The Mindset Required to Navigate Crises and Uncertainty