Does Anyone feel like Bailing

[lookout123]

Originally Posted by glatt

Watching the market a little today...

Let's say the stock market drops 25%, but then it bounces back up 25%. You get your money back. Right?

Pretend you have $100 of a stock. It falls 25%, so now you have $75.

So you now have $75, but the market goes back up 25%, so it's all cool, right? 25% of $75 is $18.75. So you bounce back up to $93.75. Nifty how that works, huh? And the fund managers make their % on the way down and on the way back up too.

What you are describing is an illustration for why the sequence of returns is so important in creating portfolios and managing them for risk. Your last statement is kind of a throw away line though. The fund managers are managing investments and risks on the way down and on the way up. They are doing their jobs, why shouldn't they continue being paid?