Market volatility in perspective: 5 ideas to stay on course
Key insights to stay focused and invest strategically in a changing environment.
Market volatility in perspective: 5 key ideas
The recent 90-day tariff pause has not eliminated uncertainty in the markets. While ups and downs continue, history reminds us that volatility is often temporary and that markets have a remarkable capacity to recover. Here are five key ideas to help maintain perspective and stay focused on your long-term goals:
- A long-term view changes everything. Stepping back from day-to-day noise allows for better decision-making. Just like in 2018, markets can bounce back strongly—as they did in 2019.
- Recoveries often follow declines. After a drop of more than 15%, markets have risen an average of 52% in the following 12 months. Keep the inversion is often wiser than reacting.
- Bear markets are shorter than they seem. On average, they last 12 months compared to 67 months of bull markets. Trying to anticipate them may mean missing out on recovery opportunities.
- Fixed income brings stability. During equity market corrections, high-quality bonds have shown their defensive role.
- Staying invested is the best strategy. Discipline has consistently paid off. A portfolio invested in the S&P 500 over the last decade would have tripled in value despite the COVID pandemic and interest rate hikes.
Market implications: History doesn’t repeat itself. A diversified portfolio and a long-term approach remain the best tools for navigating uncertainty.
Market returns have historically been strong following significant downturns.
Source: CapitalGroup
