Anxiety
Anxiety is often defined as an emotion characterized by fear, dread, and unease. Anxiety sometimes leads to physical symptoms, such as high blood pressure, restlessness, or sleeplessness. Worry about everyday events or situations is commonplace.
So, you know, a Tuesday of late.
My career spans almost 28 years and one of the more consistent themes of human behavior I’ve observed is to extrapolate the present for the foreseeable future. Said another way, investors often take today’s market activity – good or bad – and expect the market to perform in a similar fashion going forward. The last two years saw terrific market returns, which led many investors to believe that 2025 would be no different. The election reinforced that euphoria for many. Then the reality of tariffs caused a sudden and substantial negative shift in investor sentiment, to the point that many market expectations are now negative for 2025. And so it goes, back and forth, causing stomach churning drops and relief rallies, often within the span of a single day.
Markets don’t always go up, but they tend to go up over time. JP Morgan performed an analysis of the 20-year period between 1/3/2000 and 12/31/2019 (about 5,000 trading days). A very short list of momentous events that occurred during this period were 9/11, the invasion of Afghanistan, the invasion of Iraq, the Great Financial Crisis, Bush II, Obama, and Trump I.
The average annual return from the S&P 500 during that period was 6%…as long as you stayed invested. If you tried to time the market and missed just the 10 best days, your return dropped to 2.44%. If you missed the 30 best days, your return dropped to (1.95%). And if you missed the best 60 days, your return dropped to (7%).
We can’t control the markets but we can control what we do in response to the volatility inherent in the markets. Investors should be focused on tomorrow, not today. Accordingly, if the market declines and you don’t need the money today, embrace the opportunity to add more at a cheaper price than yesterday. The stock market isn’t going to zero, no matter what your brother-in-law says he read on the internet. Pay less attention to today and where you’d like to be tomorrow, or in 5 or 10 years in the future. Adversity creates opportunity – seize it.
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