Volatility A Feature of Investment Markets

The past few months have been particularly turbulent for investors. Market volatility has surged, leading to sharp declines in stock prices and causing understandable anxiety among investors and pension holders.

While these fluctuations may feel alarming, it’s essential to maintain perspective. Let’s take a step back and look at why market volatility is a normal part of investing—and why patience is key.

Stay Calm and Stick to Your Plan

It’s completely natural to feel uneasy when you see the value of your investments drop. No one enjoys seeing their wealth decline.

However, rash decisions made in moments of fear often lead to long-term regret. The best course of action?

Stay the course and avoid making impulsive moves that could negatively impact your financial future.

Market Corrections Are a Normal Occurrence

Market corrections are not uncommon. If you think back to the financial crisis of 2008-2009, many believed that markets would never recover. Yet, on March 6, 2009, the S&P 500 stood at just 666 points.

Fast forward ten years to March 6, 2019, and that same index had risen to 2,792 points—a staggering increase of over 310%.

While past performance does not guarantee future results, historical data shows that markets recover.

On average, markets experience a 15.3% decline within each calendar year, yet they have delivered positive returns 78% of the time since 1982. The key takeaway? Markets dip, but they also rebound and grow over time.

Volatility Is Part of the Investment Journey

While it may feel uncomfortable, market volatility is entirely normal.

Markets go through cycles—sometimes experiencing periods of relative stability and other times facing heightened fluctuations, like we have seen in recent months.

But these swings are simply part of how markets function.

The Power of Staying Invested

Some investors are wondering whether they should move to cash to avoid further losses. The reality is that timing the market is nearly impossible.

Many investors exit when prices are low, only to re-enter when prices are high—resulting in missed opportunities. Rather than trying to guess market movements, the best strategy is to stay invested and maintain a long-term perspective.

The shape of a recovery—whether V-shaped, U-shaped, or even resembling a “Nike Swoosh”—is uncertain. What we do know is that time in the market consistently outperforms attempts at market timing.

What Do Smart Investors Do?

Experienced investors often see market downturns as opportunities rather than threats. When stock prices fall, assets effectively go on sale.

If you’re contributing to a pension or investment plan, continuing to invest during downturns allows you to buy assets at lower prices.

As Warren Buffett wisely put it: “The stock market is a device for transferring money from the impatient to the patient.”

Those who panic and sell in a downturn often lock in losses, while those who remain patient benefit from market recoveries over time.

What Should You Do Now?

Think of your investments like a bar of soap—the more you handle them, the more they shrink.

The best approach is to remain disciplined, ignore short-term market noise, and stay committed to your long-term financial plan.

That said, if you’re feeling uncertain, we’re here to help. Don’t hesitate to reach out for a conversation—we’re always happy to provide guidance and reassurance.

Most importantly, stay focused on your long-term goals and trust in the market’s ability to recover over time.

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