Weekend Reading: Would You Rather Outperform During Bull Markets or Bear Markets?

This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
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Weekend Reading

You could be the brightest stock-picker in the land, but outperforming the market would still be incredibly difficult.


Here's the proof: According to the Wall Street Journal, in 2023, “Only one in three actively managed large-cap mutual funds beat their benchmarks in the first three months of the year.” And typically, the further you look out, the worse those results become. Over the course of 2022, however, actively managed funds did out-beat their benchmark.

Bull or bear? This prompted author Ben Carlson to beg the question: Is it better to outperform during bull markets or bear markets? If close to or in retirement, you will likely prefer outperforming in bear markets. Further, as Carlson states, “Diversification basically guarantees that you’ll underperform the best asset class during a bull market and outperform the worst asset class during a bear market.”

Maybe passive index fund investing was right for you when you were in the accumulation stage, but now it might be okay for you to shift to strategies that aren’t going to perform as well to the upside.