Stay the course? Bear market reminders for long-term investors

The broader market has taken a hit this year despite the recent rallies.

John Davi, founder and chief investment officer at Astoria Portfolio Advisors, told Bob Pisani that back-to-back down 20% years is very rare. We had two consecutive years of decline in the 1930s.

While many investors have taken on bearish strategies this year, Astoria positioned itself defensively to fight inflation in the years to come.

The quality factor was the most common exposure. There are a lot of cash-like bonds we own. Our clients have had different portfolio returns compared to a benchmark.

A potential earnings recession or a pension fund crisis in the U.K. are some of the risks that the market faces in the coming months.

He said that their word is starting to nibble. It's a good idea toibble on high quality stocks. With the goal of trying to deploy that cash in the next three to six months, look at bonds. That is not the same view as the other one.

In a 2016 interview with CNBC, Jack Bogle advised investors to resist the urge to sell.

He told them to stay the course. Stand there and don't do anything. You can't respond to speculation that we're seeing out there.

Pisani pointed out that the direction of the S&P has always been upward.

He said it was up three out of four years. Since the 1920s, 70% of the time the S&P 500 is higher.

Pisani said that the index is up 10% year over year on average. Capitalism is the reason for the recovery trend.

Pisani said that the efficiency of American corporations was important. The US does well because of a capital allocation.

There's a chance that earnings could be worse than expected. Inflation is what caused the bear market recession.

He said that if there is another 10%- 15% decline in the S&P it means that we are going into a long-term recession. "I don't think that's true."

He said that he has a more constructive outlook for the index, with downside of the S&P in the 5%- 10% range as forward looking inflation indicators, like gasoline and commodities, break even.

He said that they tried not to predict what would happen. Buy good quality and value stocks. It's a margin of safety to have liquid. I don't think it's necessary to have a PE ratio of more than 10 times for value stocks.