Regular readers of The Motley Fool need not be reminded that it's been a shocking year for stocks.
So what to do when the sea of red in your portfolio is making you anxious, angry or both?
United States financial expert and long-term buy-and-hold advocate Brian Feroldi told his subscribers an old fable that could guide those not knowing what to do right now.
"There once was a queen who wanted to learn all the wisdom in the world. She filled her library with every book she could find," he said.
"She soon realised that she would never have time to read them all. She tasked the kingdom's scholars to condense all worldly wisdom into one book."
After 10 years of work, the scholars returned with a massive book. But by then the queen had aged and her eyesight had faded.
"She asked them to condense it to a chapter. A decade later, they returned," said Feroldi.
"But by then, her attention span was notably shorter. She asked if they could narrow it all down to one sentence."
Another decade of research followed, and the queen's scholars came back with one sentence:
This, too, shall pass.
"In her old age and hard-earned wisdom, the queen readily agreed — this was the essence of worldly wisdom," Feroldi said.
Portfolios might look sick, but look how time heals
Feroldi's point was that, yes, it has been a terrible 12 months. But over time, like every other bear market, it will pass.
"In two weeks — November 19, 2022 — we will mark an important date for investors: the one year anniversary of the top of the markets."
The Nasdaq Composite (NASDAQ: .IXIC) has tumbled more than 33% over the past 12 months.
Feroldi said he and his collaborators Brian Stoffel and Brian Withers have "suffered even greater losses".
"And yet, we know in our bones that, 'this, too, shall pass'. If we back up the lens, we get perspective."
Despite 2022's underperformance, according to Google Finance, the Nasdaq index has still gained 56% over the past five years.
"Over the past 10 years, the Nasdaq is up 270%, or 14.0% per year. Over the past 20 years, the Nasdaq is up 740%, or 11.2% per year," said Feroldi.
"Over the past 30 years, the Nasdaq is up 1,730%, or 10.2% per year."
Those long-term gains, according to Feroldi, are no historical fluke.
"We believe the future will be just as bright," he said.
"And we'll be all the better for having gone through this together. This, too, shall pass."
So just hold on, let the bear market pass, and in the long run, the portfolio will sort itself out into green.
