Navigating Volatile Markets: A Long-Term Perspective for Investors
Market volatility can test even the most seasoned investor’s resolve. With headlines changing daily, it’s natural to feel uncertain. During times like these, it’s important to revisit some foundational investing principles that can help bring clarity and confidence to your investing approach.
1. Keep Your Eye on the Long Term
Short-term noise can be distracting, especially when fear is high and markets react more sharply to economic data, geopolitical events, or earnings surprises. But for retirement accounts and other long-term investment goals, it’s essential to remember that we are investors, not traders.
Markets move in cycles. While downturns can be uncomfortable, they’re also a normal part of investing. Historically, investors who stay the course through periods of volatility are more likely to reach their long-term goals than those who react emotionally and try to time the market.
2. Diversification Is the First Line of Defense
From the start, we build diversified portfolios to help reduce overall risk. We often go beyond just stocks and bonds—incorporating all major asset classes and making thoughtful, tactical adjustments as market conditions evolve. For example, during periods of increased uncertainty, we may shift toward lower volatility assets or rebalance portfolios to maintain discipline.
Diversification doesn’t eliminate losses, but it can help cushion the impact of market swings. Behind the scenes, portfolios are continuously monitored and strategies are adapted as needed to help mitigate risk.
3. Stay Invested: The Cost of Missing the Market’s Best Days
Attempting to time the market can be detrimental. The chart below illustrates how missing just a few of the market’s best-performing days can significantly impact long-term returns.
• A hypothetical $100,000 invested in the S&P 500 from 2005–2024 grew to $717,046.
• Missing the best 5 days? That total drops to $452,884.
• Miss 25 days and the ending value is just $158,792.
The takeaway: many of the best days occur during or immediately after the worst. Staying invested through downturns positions you to capture the eventual recovery—and the compounding growth that comes with it.
Final Thoughts
If you’re feeling uneasy, that’s perfectly normal. My role is to help people navigate these uncertain periods and focus on what matters most—your long-term goals. If you’d like to revisit your portfolio or just talk through the current environment, don’t hesitate to reach out.
Let’s continue to invest with discipline, diversify with intention, and stay focused on the long-term path ahead.
-Brian
Disclosures:
· Advisory services are offered through Aegis Wealth Management, Inc. The firm is registered as an investment advisor with the SEC and only conducts business in states where it is properly registered or is excluded from registration requirements. Registration is not an endorsement of the firm by securities regulators and does not mean the advisor has achieved a specific level of skill or ability. The charts and returns illustrated in this article were compiled by BlackRock Investments and do not represent the performance of Aegis, Oakway Financial, or any of their advisory clients. They do not reflect the impact that advisory fees and other expenses will have on the returns.· All investment and insurance strategies have the potential for profit or loss. Different types of investments involve higher and lower levels of risk. There is no guarantee that a specific investment or strategy will be suitable or profitable for an investor’s portfolio. Historical performance returns for investment indexes and/or categories usually do not deduct transaction and/or custodial charges or an advisory fee, which would decrease historical performance results. There are no assurances that a portfolio will match or exceed any particular benchmark. Asset allocation, rebalancing, and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses.· Backtesting utilizes a hypothetical reconstruction of how a specific strategy might have performed during a specific time period. Results do not represent actual trading, but were achieved by applying a strategy retroactively with the benefit of hindsight. Backtested strategies have inherent limitations, especially the fact that they do not represent actual trading and may not show the impact that material economic conditions might have had on the advisor’s decision-making. Actual clients’ accounts may be managed differently in response to clients’ liquidity needs, account restrictions, and/or the client’s investment objectives.