If you consumed any media lately, you heard plenty of chatter about Tariff Shock in stock markets.
A friendly reminder, I describe most of the financial media as the “financial pornography complex.” The reason is that most media -- and financial media in particular -- are primarily focused on making money. And the way they make money is to keep people interested so they will watch the messages from advertisers. One of the great lessons of the social media age is that negative messages get more attention than positive messages.
So, take a deep breath. Maybe take a walk outside. Remember that your goals are long term goals. One day, one week, one month and even one year should NOT affect a solid, prudent financial gameplan.
Sure, the financial news is interesting. And it can be scary. So maybe it’s got you asking questions, maybe you should visit with an experienced, highly-trained, CERTIFIED FINANCIAL PLANNER™ professional and Behavioral Financial Advisor in Saint Paul, Minnesota to help better understand your options. I love to meet new people.
So, if you are NOT YET A CLIENT, follow this LINK to find a time for us to have a get-acquainted visit.
If you are a CLIENT, follow this LINK to find a time for us to review your financial plan.
In the meantime, here are some thoughts that I hope will put things into perspective.
Some Perspective
I recorded a brief video to offer some perspective with the details reprinted below for reference.
The recent market decline is annoying, but it’s not unprecedented. Here are some comparisons with the S&P 500 index as of the Monday 7 April close (S&P 500 at 5,062).
- Since the last market high on 19 February 2025, we are down about 1,085 points or 18%.
- For calendar year 2025, we are down about 807 points or14%.
- For the last 12 months, we are down about 142 points or 2.75%.
- For the last 3 years, we are up about 537 points or 3.96%/year.
- For the last 5 years, we are up about 2,398 points or 18%/year.
- Since October 2007 before the Great Financial Crisis, we are up about 3,515 points or 12.96%/year.
The Stock Market is a Yo-Yo on an Escalator
The recent market decline is annoying, but it’s not unprecedented. The markets are a yo-yo because they go up and down all day long all the time. But the yo-yo is riding an escalator that rises over time.
As the accompanying chart shows, the S&P 500 has gained 102.4% since 2019, including the pandemic collapse and the 2022 bear market. While market pullbacks are never pleasant, viewing the market on these timescales does help to put the current decline in perspective.
Market Swings are NORMAL
Market pullbacks are normal. As the chart above shows, the AVERAGE calendar year correction is 13.5% with calendar year returns POSITIVE 34 out of 45 years since 1980. And, this is while the S&P 500 has delivered an average total return (dividends reinvested) of 11.53% from January of 1980 to end of March 2025.
Stocks never move up in a straight line, so how we react to market volatility is perhaps more important than the volatility itself.
Today, market concerns are driven by tariff threats. The economy is still quite healthy, corporate earnings are still growing, employment remains high, and interest rates are near historical averages. As in past episodes of volatility, it’s important to keep your focus on your important financial planning goals. Do NOT be distracted by short-term events.
Markets Bounce Back
As the table above shows, the average 20 percent decline in the S&P 500 returns to a new high in 335 days. And take note, we get a 20% decline about every 5.5 years.
Clearly, market volatility can make you think. If it’s got you asking questions, maybe you should visit with an experienced, highly trained, CERTIFIED FINANCIAL PLANNER™ professional and Behavioral Financial Advisor in West Saint Paul, Minnesota to help better understand your options.
I love to meet new people. So, if you are NOT YET A CLIENT, follow this LINK to find a time for us to have a get-acquainted visit.
If you are a CLIENT, follow this LINK to find a time for us to review your financial plan.
I am a financial planner who is an advocate for my clients all the time – a Fiduciary Financial Planner. I provide guidance based on clients’ best interests. I think it’s the best way to serve clients and I am thrilled to work this way all the time.
And yes, I’m still taking on a few great families to be part of my financial planning practice in West Saint Paul, Minnesota and, thanks to Zoom, across the country.
Dunncreek Advisors does not provide legal or tax advice, nor is this article intended to do so.