Staying Calm Through the Storm

Let's be honest - watching your investments drop can feel unsettling. The recent period of strong returns and relatively calm markets has been wonderful, but here's something important to remember: it's actually the exception, not the rule.

Here's a perspective that might surprise you: Since 1950, the S&P 500 has experienced a double-digit drop in 34 different years. In fact, there have been only four years when the market didn't see at least a 5% correction. Yet despite all this volatility, the S&P 500 has delivered an average annual return of 11% over this period.

What does this tell us? Market ups and downs aren't anomalies - they're simply part of the investing journey. And historically, investors who stay the course have been rewarded for their patience.

Unfortunately, many investors become their own worst enemy. The pattern is all too common: they jump into investments when prices are high (chasing recent gains), then panic and sell when values drop. This "buy high, sell low" approach is the opposite of what builds wealth.

As a client of De Thomas, you are familiar with our approach: we invest with a long-term perspective. We believe that market declines, although uncomfortable, actually present opportunities to buy quality investments at better prices—much like shopping during a sale.

That said, investing needs to feel right for you personally. If recent market movements have kept you up at night, that's an important signal. Your investments should align with your comfort level and risk tolerance. There's no shame in reassessing—we'd rather help you find the right balance than have you lose sleep over your portfolio.

If you've been feeling anxious about your investments lately, please reach out to us. We can review your portfolio together and make sure it still fits your needs.

When you have confidence in an investment's long-term value, short-term price movements become less meaningful. In fact, they often create opportunities rather than problems.

This situation raises important questions:

1. Do short-term market movements in individual investments really matter?

2. Should investors exit the stock market entirely and wait for calmer times?

Our answer to both is no, and here's why:

Trying to predict the perfect time to buy and sell rarely works. What does work? Maintaining a diversified portfolio and regularly rebalancing it. This disciplined approach means you're naturally selling investments that have risen in value and buying those that have declined - essentially buying low and selling high without needing a crystal ball.

These periodic downturns actually serve a purpose. They clear out excesses and create conditions for future growth. To put recent declines in perspective, even with market volatility, long-term investors who stayed invested through previous downturns have seen their portfolios grow substantially over five-year periods.

Market volatility will always be part of investing. Our philosophy remains unchanged: we focus on your long-term financial objectives rather than reacting to short-term noise. While we can't predict what the market will do next week or next month, we're confident that staying disciplined and focused on your goals remains the best path to building and preserving wealth.

Remember, successful investing isn't about avoiding every downturn - it's about having a solid plan and sticking with it through the inevitable ups and downs. We're here to help you do exactly that.