“History does not repeat itself. It rhymes.” – Mark Twain
This unique observation can accurately be applied to the current state of the economy and financial markets. Rising costs of food and fuel, dropping home prices, and banking industry woes have coalesced in 2008 to create what some investors and analysts have characterized as an unprecedented combination of dire events.
While the current state of affairs may not be identical to any we have experienced in the past, it does have a familiar ring to it. History has shown that markets move in cycles. Successful investors anticipate periods of unfavorable returns. Understanding how market cycles perform – over time – can not only help ensure long-term investing success, it also can help alleviate the short-term stress of market declines.