Many have fled stocks for the safety of bonds or cash. In the long runthis panic will cost you in returns and hurt your long term retirment goals. Remain calm and believe in your academiccally proven strategy.

Despite the bleaker outlook going forward, the stock market is still about your only hope of overcoming the bite that inflation and taxes will take out of your retirement savings.“The future real [after-inflation] return of a traditional mix of stocks and bonds may be closer to 2% than the 5% average of the past,” said Chris Brightman, a chartered financial analyst and head of investment management at Research Affiliates LLC in Newport Beach, Calif.

And the ride will be bumpier. Brightman said the annualized standard deviation of monthly stock-market returns was 15% for the past decade, up from about 10% in the 1990s and 1960s. Still, he said, “the average recent volatility of 14% to 15% is only slightly higher than the 13% to 14% level during the 1970s and 1980s.” Since 1831, the average is 14.5%.

But despite the weak — and volatile — outlook, people investing for retirement need stocks.

To succeed in reaching your retirement goals you must own equities. You must have a disciplined and academically proven strategy. Trying to market time or picking the hot asset class will inevitably lead to failure.

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