Triggered by the Great Peruvian Earthquake, the deadliest avalanche on record occurred in Peru on May 31, 1970. Large chunks of ice and snow accelerating up to 210 miles per hour wiped out two towns and devastated everything in its path. Twenty thousand people perished in this disaster. These large avalanches are amazing with the amount of damage they cause. https://www.worldatlas.com/articles/deadliest-avalanches-in-history.html.
Although the big ones occur, smaller ones happen more frequently. Worldwide it is estimated that 1,000,000 avalanches occur each year. While in the United States, it is estimated that 100,000 events happen. Though small slides can kill. In the United States, 25 avalanche deaths occurred during the 2018-2019 season https://avalanche.state.co.us/caic/acc/acc_us.php. Small avalanches can end real dreams for those caught in them.
We go into the backcountry to enjoy the experience and excitement of winter sports, precautions should be taken. The Colorado Avalanche Information Center (CAIC) provides avalanche forecasts and education to reduce the risk of death by avalanches. They work to increase avalanche awareness with their “Know Before You Go” education program. CAIC encourages planning and safe practices for the winter outdoor sports person. With planning and education, you can have an enjoyable experience but it takes just one mistake to have deadly consequences.
Avalanches aren’t the only thing which can end real dreams. The 2008 market crash was the worst market downturn ever wiping out unknown numbers of investors. The investors panicked and destroyed their dreams trying to time the market. Many of those investors have not returned to the market. As a result, they missed out on one of the largest growth periods in the market since the 2008 bottom.
While equity investing can create the best returns over the long term, the stock market can destroy real dreams. It takes discipline to stay in the market when others panic. During a market downturn, the largest transfer of wealth will occur. Those investors who are properly diversified to their own risk preference and stay in the market during a downturn will benefit. Those who panic and leave the market may never recover their losses. Long term investing wins the long game.
Just as no one can predict when the next avalanche will take place. No one can predict when the next market crash will occur. So, what should an investor do? They should follow the academic principles of investing. Invest in equities as widely as widely diversified as possible. Stay invested in the market at all time according to your specific risk preference. Avoid stock picking, market timing and track record investing. Although no one knows when the next market downturn will occur, we do know that staying in the market for the long term is the best way to get returns. When it gets tough and the panic begins, it is good to be prepared with education and planning. Working with a financial coach who believes in the academic principles of investing will help you avoid that one mistake.
by Larry Stone, Stone Advisors
Stone Advisors Inc. is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance