The start of 2025 has brought on a rapidly changing landscape of headlines changing by the day. Given the evolving situation we have to begin this year, it is more important than ever to talk about how to navigate it. Let’s jump into it.
There are a few things that are essential to remember during any time like this.
Markets moving both up and down is normal
This is temporary
Turn the news off and do something else
We see stock market moves all of the time. It always feels worse when they are moving down, but even some of the best years have the market moving into negative territory. Just in recent history, in 2023 the S&P 500 was down 10% at one time and ended up 24% for the year. In 2024, the S&P 500 was down 8% and ended up 23% for the year. So movement to the downside is not uncommon.
The first step of action once you are feeling uncomfortable is to check in on the investment structure that you have. And more importantly, answer the question, why is it set up the way it is. Also, is there a plan when the market is more volatile or when it is moving down?
If you work with us, give us a call. We are always happy to walk through exactly what we are seeing and why we are structured that way we are.
If you don’t work with us and invest on your own. Take a look at the protections you have to market movement. Answer questions like is it enough protection? Is it best for you? And how will you use those investments in a down market? Answering these can give some clarity around your strategy in times of uncertainty.
Remembering that this is temporary is one of the best things you can do. It can be hard. You see constant headlines and coverage of the stock market and economy. All serving a reminder of what the market is doing that day, that hour, that minute. All of it can lead to some anxiety, and understandably so. However, this is all temporary. The story will change, the headlines will change, and things will move forward. In any one year you can point to a number of headlines that call for panic. And even with that, the S&P 500 has had positive yearly returns 74% of the time dating back to 1926.
While it feels really loud and can be overwhelming when you watch the news or market day after day, all of the uncertainty will be solved with time. Relying on your investment plan and the safety built into that plan will get you through this time. Historically, it has shown to benefit those that are patient and calm through a changing landscape. Again, it isn’t easy. But investing isn’t supposed to be. And you will see headlines and hear stories about how “this time is different” - in reality, it is another time in history. And all the other times before this were “different” too and we got through those as well.
Those on tv making predictions or commenting on the market and economy are not you. You may have (most likely do) have different goals than those you see on tv. Because of this, you may have a different strategy or outlook in times of uncertainty. It can be beneficial to listen to those to stay informed, but more often than not, their ideas do not reflect what you are trying to achieve. So basing decisions on that information can be misguided.
In summary, times like this happen. Making sure your investment strategy has a plan for times like this is essential. Also trying to avoid additional headlines and noise will help as well.