While many financial experts advocate a long-term "buy and hold" strategy, it’s essential to recognize that severe market downturns can coincide with pivotal life events, such as retirement, resulting in prolonged recovery periods.

Moreover, the perception of gold as a safe haven during market volatility requires reevaluation. For instance, gold saw a 60% decline in 2008 and a 30% drop in 2020. These downturns occur because, during extreme market stress, both individuals and institutions often engage in a "flight to safety," leading to the liquidation of all assets, including bonds. Consequently, almost all asset classes can crash simultaneously, a phenomenon that is further exacerbated by the widespread use of exchange-traded funds (ETFs).

Since ETFs encompass a diverse range of assets, their mass liquidation can lead to correlated declines across various asset classes, undermining traditional diversification strategies.

To gain a comprehensive understanding of potential drawdowns, refer to the attached spreadsheet detailing maximum drawdowns during financial crises. This information can aid you in evaluating the resilience of your investments against significant market downturns.

Maximum Drawdowns During Financial Crises

• Please open the attached spreadsheet to analyze your potential drawdowns in various financial crises.

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