Figure 1: US equity returns after steep market declines

(Click to enlarge image)

Source: BNY Mellon, Russell Investments. S&P 500 Total returns in USD

Similarly, Figure 2 shows the results for the Australian share market.

Figure 2: Australian equity returns after steep market declines

(Click to enlarge image)

Source: Russell Investments, Datastream. ASX All Ords Index total returns in AUD

This strong historical tendency of markets to rebound suggests that dramatic alterations to asset allocation that are driven out of fear may not help investors achieve their longer term objectives.