Let’s Ride Together

As I write this (after the market close on Thursday, 3/13) we’ve hit correction territory on the S&P 500. For those that don’t know what that is, a market correction is defined as a -10% decline from the high point or peak. This is the 7th fastest correction in the history of the S&P 500 index (16 trading days – fastest since March 2020, which was 6 days)x¹. I imagine you already know that by now, as the media has been and will continue to cover the market volatility extensively as it persists. Corrections are an entirely normal thing, as we’ve experienced them in at least 19 out of the past 30 years. Despite that, the S&P has generated a positive annual return 24 out of those past same 30 years².

However, this time feels different than the others – why? It’s because it appears “self-inflicted” by the goings-on in Washington D.C. over the past two months. Hard to get any solid footing in the markets when policy (especially tariff policy) is unpredictable at best. You know that unpredictability and uncertainty are enemies of stability, and neither are in short supply. I’m not going to tell you that I’m not anxious about it – I am. I’m not going to pretend to tell you that I know how this is going to play out and end – I don’t. But the underlying engine & culture of the equity markets are still intact and are unlikely to change even in the face of these challenges. Many of you have heard us say this before; the engine of which we speak is “good old-fashioned American capitalism” (trademark pending ) and the engine is still humming.

My advice is: continue to hang tight. We know that it can be very hard and even more uncomfortable, and likely it will continue to be for some time. It feels like we should be wheeling & dealing and making widespread changes. But jumping in and out of the market can come at a high cost. In a 20-year period, ending on 12/31/23, fully invested investors enjoyed an annual return on the S&P 500 of +9.69%. If you missed the 10 best days in that period, that return dropped to +5.50% annually. Missing the 20 best days dropped your yearly return to +2.84%, and it only gets worse from there³. Given the previously mentioned unpredictability, if the policies change to be more favorable to the markets, the rebound should be quick, and we want to be right in the mix when that happens.

So, the right thing to do is ride this out, and we’ll do so together. It’s likely to remain uncomfortable, but we’ll get through it. My belief is that 5 years from now, this will all be a distant memory, just like COVID and the uncertainty we were all feeling 5 years ago (can you believe it?) The team and I are all here to support you and answer your questions. Please reach out to us if we can lend a helping hand or keep you from teetering over the edge.