With the recent bout of downward volatility that much of the U.S. and global stock market is going through, we wanted to provide our thoughts and a chart below as reminders of staying the course, even through the difficult times. Stock market volatility is a normal part of investing, but can often feel unsettling, especially when market swings are sharp or unpredictable. This recent volatility is being largely driven by fears surrounding tariffs and a potential trade war, but volatility can be driven by a range of factors, including geopolitical events, corporate earnings reports, and even global crises. While these fluctuations can create fear and uncertainty, they are also opportunities for investors who stay focused on their financial plan based long-term goals.
History has shown that markets tend to recover over time, even after significant downturns, and investors who maintain a long-term perspective are often rewarded with positive returns. This is shown in the chart below from our friends at The Hartford Funds, which highlights the 10-Worst Single Day Percent declines in the S&P 500 since 1981.
Top 10 Stock Market Drops & Recoveries
By looking at the chart, in 9 out of 10 years the S&P 500 was positive one year later, and the returns after 3- and 5-years were all positive as well. While not a guarantee, we want to remind clients that by maintaining a long-term, diversified investment plan, and avoiding an emotional reaction to short-term market movements, investors can weather the ups and downs of the markets.
Finally, for our clients in their retirement and distribution phase of life and are taking income or required minimum distributions from their portfolios, we have planned for times like this. We have previously rebalanced and set aside funds in money market or short-term bonds to help manage liquidity needs during times of downward volatility. For our clients still working and actively saving for retirement or future investment goals, bouts of downward volatility often present opportunities to purchase shares at lower prices than where they were a few weeks or months ago.
We appreciate your trust and confidence in our team and process to serve you and your families hardearned resources through times of uncertainty. As always, please feel free to reach out if you have any questions about your specific financial situation as we continue Moving Life Forward together.
© 2025 Nathan Ollish
Senior Financial Advisor
Related Content
Securities and advisory services offered through Cetera Advisors LLC, member FINRA, SIPC, a broker/dealer and a registered investment adviser. Cetera is under separate ownership from any other named entity. For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisors LLC nor any of its representatives may give legal or tax advice.
Featured Blog Image Source: iStock.com/Bet_Noire