Principles of Long-Term Investing Resilience
Market volatility is a part of investing. Rather than reacting when volatility strikes, learn how a cool head and a well-diversified portfolio can be one way to effectively navigate the market's ups and downs.
Our playbook can help you work with your investment professional to navigate your long-term goals.
Learn More
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Market movements
Markets have been resilient: History shows declines don’t last.
Markets are always moving — up, down and sideways. Market volatility is inevitable and normal based on historical performance.
The challenge for investors is to not let market declines get them off track as they seek to achieve long-term goals. Because as shown in the chart below, stock markets have recovered from the disruptive, but ultimately short-term, declines — and gone on to post gains.In the past 44 years, only 10 declines have led to a down year.
2023
As of 12/31/23
Moving out of stocks could potentially lock in losses and prevent you from profiting from any subsequent gains.
View Full Flyer
Source: FactSet and S&P US. Daily data as of 31 December 1979 to 29 December 2023. Returns above are in US dollars and calculated based on the S&P 500 Price Return Index. Max drawdown is the largest drawdown (peak-to-trough) within each calendar year.
Intrayear decline is the largest price drop from peak-to-trough during a calendar year.
Past performance is no guarantee of future results. These data are not intended to represent the performance of any MFS® portfolio. For more information on any MFS product, including performance, visit mfs.com.
The S&P 500 Index measures the broad US stock market. Returns for periods noted are price only.
It is not possible to invest directly in an index.
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Controlling emotions
Pursuing Your Goals
Unfortunately, emotions and investment decisions may not be your best combination. Working with your investment professional or financial advisor can help keep you on course. Market research shows that the average investor underperforms1. Maybe they try to protect their portfolios by moving in and out of the market. All too often, selling during a decline just locks in losses and jumping in after a rally may mean you’ve just missed some of the market’s gains. Remember the plan your investment professional or financial advisor has developed based on your goals, needs, and risk tolerance is to help you work towards those goals.
The Average Investor Underperformed1
When investors tried to protect their portfolios by moving in and out of the market, they often limited gains and increased losses instead.
A good financial coach can help you develop a sound long-term plan to pursue your goals.
Source: Dalbar, 2024 QAIB Report, as of December 31, 2023.
The S&P 500 Total Return Index measures the broad US stock market. Bloomberg U.S. Aggregate Bond Index measures the U.S. bond market.
Bloomberg Index Services Limited. BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively “Bloomberg”). Bloomberg or Bloomberg’s licensors, own all proprietary rights in the Bloomberg Indices. Bloomberg does not approve or endorse this material, nor does it guarantee the accuracy or completeness of any information herein, or make any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, shall not have any liability or responsibility for injury or damages arising in connection therewith.
Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and have been licensed for use by S&P Dow Jones Indices LLC and sublicensed for certain purposes by Massachusetts Financial Services Company (“MFS”). The S&P 500® is a product of S&P Dow Jones Indices LLC, and has been licensed for use by MFS. MFS’s product(s) is not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P, or their respective affiliates, and neither S&P Dow Jones Indices LLC, Dow Jones, S&P, their respective affiliates make any representation regarding the advisability of investing in such product(s).
This example is for illustrative purposes only and is not intended to represent the future performance of any MFS® product. Although the data is gathered from sources believed to be reliable, MFS cannot guarantee the accuracy and/or completeness of the information.
1 The Average Investor refers to the universe of all mutual funds investors whose actions and financial results are restated to represent a single investor. This approach allows the entire universe of mutual funds investors to be used as the statistical sample.
2 Average investor return performance: Methodology: QAIB calculates investor returns as the change in assets, after excluding sales, redemptions and exchanges. This method of calculation captures realized and unrealized capital gains, dividends, interest, trading costs, sales charges, fees, expenses and any other costs. After calculating investor returns in dollar terms, two percentages are calculated: total investor rate for the period and annualized investor return rate. Total return rate is determined by calculating the investor return dollars as a percentage of the net assets, sales, redemptions and exchanges for the period. Annualized return rate is calculated as the uniform rate that can be compounded annually for the period under consideration to produce the investor return dollars.
3 The Average Stock Fund Investor comprises a universe of both domestic and world equity mutual funds. It includes growth, sector, alternative strategy, value, blend emerging markets, global equity, international equity and regional equity.
4 The Average Bond Fund Investor is comprised of a universe of fixed income mutual funds, which includes investment-grade, high-yield, government, municipal, multisector, and global bond funds. It does not include money market funds.
Past performance is no guarantee of future results. Keep in mind that all investments carry a certain amount of risk, including the possible loss of the principal amount invested.
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Long-term view
Building wealth takes time. Think long term.
Historically, investing in stocks has been one of the best ways to build wealth, compared to bonds. That’s because over long periods of time the stock market has generated positive returns. And moving in and out of the market — market timing — to avoid volatility rarely works. Your investment professional can help you build a portfolio that could potentially allow you to ride out the ups and downs of the stock market and work towards achieving your long-term goals.
As part of an overall portfolio, consider stocks for their long-term growth potential.
View Full Flyer
The investments you choose should correspond to your financial needs, goals, and risk tolerance. For assistance in determining your financial situation, consult an investment professional. Past performance is no guarantee of future results.
Source: FactSet and S&P US. Monthly data as of 30 December 1949 to 29 December 2023. Price returns are that of the S&P 500 Index in US dollars. The S&P 500 Index measures the broad US stock market. Index performance does not include any investment-related fees or expenses. It is not possible to invest directly in an index.
Common stocks generally provide an opportunity for more captial appreciation than fixed-income investments but have also been subject to greater market fluctuations. Keep in mind that all investments do not guarantee a profit or protect against a loss.
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Diversification
Diversification may potentially add value and help manage risk
Everyone wants to be in the best-performing asset class every year. The thing is, few people are savvy enough to consistently choose the best. That’s why diversification is key. This chart shows annual returns for eight broad-based asset classes, cash and a diversified portfolio ranked from best to worst. Notice how the “leadership” changes from year to year, and how competitively the diversified portfolio performed over 20 years (see the “average” column).
Diversification spreads your investments between asset classes that perform differently.
Note that the diversified portfolio’s assets were rebalanced at the end of every quarter to maintain the equal allocations throughout the period. Standard deviation reflects a portfolio’s total return volatility, which is based on a minimum of 36 monthly returns. The larger the portfolio’s standard deviation, the greater the portfolio’s volatility. Diversification does not guarantee a profit or protect against a loss.
Source: FactSet SPAR. Returns are in USD, and net for MSCI EAFE and gross for all other asset classes. Annualized return and standard deviation (annualized) is for the 20-year period ending 31 December 2023. The diversified portfolio is rebalanced quarterly to maintain the equal allocations throughout the period. Standard deviation reflects a portfolio’s total return volatility, which is based on a minimum of 36 monthly returns. The larger the portfolio’s standard deviation, the greater the portfolio’s volatility. Diversification does not guarantee a profit or protect against a loss.
IMPORTANT RISK CONSIDERATIONS
International: Investing in foreign and/or emerging market securities involves interest rate, currency exchange rate, economic, and political risks. These risks are magnified in emerging or developing markets as compared with domestic markets. Small/Mid Cap stocks: Investing in small and/or mid-sized companies involves more risk than that customarily associated with investing in more-established companies. Bonds: Bonds, if held to maturity, provide a fixed rate of return and a fixed principal value. Bond funds will fluctuate and, when redeemed, may be worth more or less than their original cost. Commodity: Commodity-related investments can be more volatile than investments in equity securities or debt instruments and can be affected by changes in overall market movements, commodity index volatility, changes in interest rates, currency fluctuations, or factors affecting a particular industry or commodity, and demand/supply imbalances in the market for the commodity. Events that affect the financial services sector may have a significant adverse effect on the portfolio. Real Estate: Real estate-related investments can be volatile because of general, regional, and local economic conditions, fluctuations in interest rates and property tax rates; shifts in zoning laws, environmental regulation and other governmental actions; increased operation expenses; lack of availability of mortgage funds; losses due to natural disasters; changes in property values and rental rates; overbuilding; losses due to casualty or condemnation, cash flows; the management skill and creditworthiness of the REIT manager, and other factors.The historical performance of each index cited is provided to illustrate market trends; it does not represent the performance of a particular MFS® investment product. It is not possible to invest directly in an index. Index performance does not take into account fees and expenses. Past performance is no guarantee of future results. The investments you choose should correspond to your financial needs, goals, and risk tolerance. For assistance in determining your financial situation, consult an investment professional. For more information on any MFS product, including performance, please visit mfs.com.
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Rebalancing
Market performance shifts over time - stocks outperform bonds, then value stocks outpace growth, then US markets overtake international. These shifts can result in changes to your asset allocation, and in response, your portfolio could take on a more aggressive or conservative tilt. Rebalancing - bringing your portfolio back to its original allocation - can help you avoid this pitfall.
Rebalancing can bring your mix of investments back in line with your original allocation.
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Working with an advisor
The Benefits of Working With a Professional
These views should not be relied upon as investment advice, as securities recommendations, or as an indication of trading intent on behalf of any other MFS investment product. MFS does not provide legal, tax, or accounting advice. Clients of MFS should obtain their own independent tax and legal advice based on their particular circumstances.
Markets have been resilient: History shows declines don’t last.
Markets are always moving — up, down and sideways. Market volatility is inevitable and normal based on historical performance.
The challenge for investors is to not let market declines get them off track as they seek to achieve long-term goals. Because as shown in the chart below, stock markets have recovered from the disruptive, but ultimately short-term, declines — and gone on to post gains.
In the past 44 years, only 10 declines have led to a down year.
2023
As of 12/31/23
Moving out of stocks could potentially lock in losses and prevent you from profiting from any subsequent gains.
View Full Flyer
Source: FactSet and S&P US. Daily data as of 31 December 1979 to 29 December 2023. Returns above are in US dollars and calculated based on the S&P 500 Price Return Index. Max drawdown is the largest drawdown (peak-to-trough) within each calendar year.
Intrayear decline is the largest price drop from peak-to-trough during a calendar year.
Past performance is no guarantee of future results. These data are not intended to represent the performance of any MFS® portfolio. For more information on any MFS product, including performance, visit mfs.com.
The S&P 500 Index measures the broad US stock market. Returns for periods noted are price only.
It is not possible to invest directly in an index.
Pursuing Your Goals
Unfortunately, emotions and investment decisions may not be your best combination. Working with your investment professional or financial advisor can help keep you on course. Market research shows that the average investor underperforms1. Maybe they try to protect their portfolios by moving in and out of the market. All too often, selling during a decline just locks in losses and jumping in after a rally may mean you’ve just missed some of the market’s gains. Remember the plan your investment professional or financial advisor has developed based on your goals, needs, and risk tolerance is to help you work towards those goals.
The Average Investor Underperformed1
When investors tried to protect their portfolios by moving in and out of the market, they often limited gains and increased losses instead.
A good financial coach can help you develop a sound long-term plan to pursue your goals.
Source: Dalbar, 2024 QAIB Report, as of December 31, 2023.
The S&P 500 Total Return Index measures the broad US stock market. Bloomberg U.S. Aggregate Bond Index measures the U.S. bond market.
Bloomberg Index Services Limited. BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively “Bloomberg”). Bloomberg or Bloomberg’s licensors, own all proprietary rights in the Bloomberg Indices. Bloomberg does not approve or endorse this material, nor does it guarantee the accuracy or completeness of any information herein, or make any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, shall not have any liability or responsibility for injury or damages arising in connection therewith.
Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and have been licensed for use by S&P Dow Jones Indices LLC and sublicensed for certain purposes by Massachusetts Financial Services Company (“MFS”). The S&P 500® is a product of S&P Dow Jones Indices LLC, and has been licensed for use by MFS. MFS’s product(s) is not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P, or their respective affiliates, and neither S&P Dow Jones Indices LLC, Dow Jones, S&P, their respective affiliates make any representation regarding the advisability of investing in such product(s).
This example is for illustrative purposes only and is not intended to represent the future performance of any MFS® product. Although the data is gathered from sources believed to be reliable, MFS cannot guarantee the accuracy and/or completeness of the information.
1 The Average Investor refers to the universe of all mutual funds investors whose actions and financial results are restated to represent a single investor. This approach allows the entire universe of mutual funds investors to be used as the statistical sample.
2 Average investor return performance: Methodology: QAIB calculates investor returns as the change in assets, after excluding sales, redemptions and exchanges. This method of calculation captures realized and unrealized capital gains, dividends, interest, trading costs, sales charges, fees, expenses and any other costs. After calculating investor returns in dollar terms, two percentages are calculated: total investor rate for the period and annualized investor return rate. Total return rate is determined by calculating the investor return dollars as a percentage of the net assets, sales, redemptions and exchanges for the period. Annualized return rate is calculated as the uniform rate that can be compounded annually for the period under consideration to produce the investor return dollars.
3 The Average Stock Fund Investor comprises a universe of both domestic and world equity mutual funds. It includes growth, sector, alternative strategy, value, blend emerging markets, global equity, international equity and regional equity.
4 The Average Bond Fund Investor is comprised of a universe of fixed income mutual funds, which includes investment-grade, high-yield, government, municipal, multisector, and global bond funds. It does not include money market funds.
Past performance is no guarantee of future results. Keep in mind that all investments carry a certain amount of risk, including the possible loss of the principal amount invested.
Building wealth takes time. Think long term.
Historically, investing in stocks has been one of the best ways to build wealth, compared to bonds. That’s because over long periods of time the stock market has generated positive returns. And moving in and out of the market — market timing — to avoid volatility rarely works. Your investment professional can help you build a portfolio that could potentially allow you to ride out the ups and downs of the stock market and work towards achieving your long-term goals.
As part of an overall portfolio, consider stocks for their long-term growth potential.
View Full Flyer
The investments you choose should correspond to your financial needs, goals, and risk tolerance. For assistance in determining your financial situation, consult an investment professional. Past performance is no guarantee of future results.
Source: FactSet and S&P US. Monthly data as of 30 December 1949 to 29 December 2023. Price returns are that of the S&P 500 Index in US dollars. The S&P 500 Index measures the broad US stock market. Index performance does not include any investment-related fees or expenses. It is not possible to invest directly in an index.
Common stocks generally provide an opportunity for more captial appreciation than fixed-income investments but have also been subject to greater market fluctuations. Keep in mind that all investments do not guarantee a profit or protect against a loss.
Diversification may potentially add value and help manage risk
Everyone wants to be in the best-performing asset class every year. The thing is, few people are savvy enough to consistently choose the best. That’s why diversification is key. This chart shows annual returns for eight broad-based asset classes, cash and a diversified portfolio ranked from best to worst. Notice how the “leadership” changes from year to year, and how competitively the diversified portfolio performed over 20 years (see the “average” column).
Diversification spreads your investments between asset classes that perform differently.
Note that the diversified portfolio’s assets were rebalanced at the end of every quarter to maintain the equal allocations throughout the period. Standard deviation reflects a portfolio’s total return volatility, which is based on a minimum of 36 monthly returns. The larger the portfolio’s standard deviation, the greater the portfolio’s volatility. Diversification does not guarantee a profit or protect against a loss.
Source: FactSet SPAR. Returns are in USD, and net for MSCI EAFE and gross for all other asset classes. Annualized return and standard deviation (annualized) is for the 20-year period ending 31 December 2023. The diversified portfolio is rebalanced quarterly to maintain the equal allocations throughout the period. Standard deviation reflects a portfolio’s total return volatility, which is based on a minimum of 36 monthly returns. The larger the portfolio’s standard deviation, the greater the portfolio’s volatility. Diversification does not guarantee a profit or protect against a loss.
IMPORTANT RISK CONSIDERATIONS
International: Investing in foreign and/or emerging market securities involves interest rate, currency exchange rate, economic, and political risks. These risks are magnified in emerging or developing markets as compared with domestic markets. Small/Mid Cap stocks: Investing in small and/or mid-sized companies involves more risk than that customarily associated with investing in more-established companies. Bonds: Bonds, if held to maturity, provide a fixed rate of return and a fixed principal value. Bond funds will fluctuate and, when redeemed, may be worth more or less than their original cost. Commodity: Commodity-related investments can be more volatile than investments in equity securities or debt instruments and can be affected by changes in overall market movements, commodity index volatility, changes in interest rates, currency fluctuations, or factors affecting a particular industry or commodity, and demand/supply imbalances in the market for the commodity. Events that affect the financial services sector may have a significant adverse effect on the portfolio. Real Estate: Real estate-related investments can be volatile because of general, regional, and local economic conditions, fluctuations in interest rates and property tax rates; shifts in zoning laws, environmental regulation and other governmental actions; increased operation expenses; lack of availability of mortgage funds; losses due to natural disasters; changes in property values and rental rates; overbuilding; losses due to casualty or condemnation, cash flows; the management skill and creditworthiness of the REIT manager, and other factors.
The historical performance of each index cited is provided to illustrate market trends; it does not represent the performance of a particular MFS® investment product. It is not possible to invest directly in an index. Index performance does not take into account fees and expenses. Past performance is no guarantee of future results. The investments you choose should correspond to your financial needs, goals, and risk tolerance. For assistance in determining your financial situation, consult an investment professional. For more information on any MFS product, including performance, please visit mfs.com.
Market performance shifts over time - stocks outperform bonds, then value stocks outpace growth, then US markets overtake international. These shifts can result in changes to your asset allocation, and in response, your portfolio could take on a more aggressive or conservative tilt. Rebalancing - bringing your portfolio back to its original allocation - can help you avoid this pitfall.
Rebalancing can bring your mix of investments back in line with your original allocation.
The Benefits of Working With a Professional
These views should not be relied upon as investment advice, as securities recommendations, or as an indication of trading intent on behalf of any other MFS investment product. MFS does not provide legal, tax, or accounting advice. Clients of MFS should obtain their own independent tax and legal advice based on their particular circumstances.
This site is intended for use by U.S. residents. If you are not a U.S. resident, please visit other MFS sites.
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