Steadfast Investing: Lessons from Crisis to Prosperity

In times of market turmoil, it’s crucial to maintain perspective. Let’s reflect on the investment landscape from a historical vantage point that can guide equity investors through uncertain times.

The COVID Lesson

Five years ago, we faced a scenario beyond human comprehension. Global markets shut down during the onset of COVID-19. Uncertainty reigned supreme—we didn’t understand transmission patterns, treatment protocols, or timelines for vaccine development. Entire populations of elderly in nursing homes were devastated, and social distancing protocols prevented us from holding the hands of loved ones when they needed us most. We stood at the precipice of economic collapse and a once-in-a-century tragedy.

The results were staggering: the broad stock market plummeted 34% in just 33 days. Many investors panicked, converted holdings to cash, and inadvertently destroyed generations of wealth by abandoning their investment plans. Yet, a mere 34 days into this horrific decline, the Federal Reserve Chair announced unlimited monetary support for the economy. Within six months, the market had recovered all losses—and continued soaring to unprecedented heights.

During that low point, the S&P hovered around 2,300 points. With price appreciation and dividends being reinvested, markets nearly tripled over the subsequent five years to new heights.

Present Uncertainty

Today, even before and in light of recent tariff discussions, some consider the market overpriced (quite high price/earnings ratio in the S&P). But can anyone truly make intelligent decisions based on limited information? There is still so much uncertainty with what is going on and how the tariffs are going to shape both the domestic and the global economy. What remains constant is the plan—the same plan that worked when markets cratered during COVID. This approach has demonstrably succeeded even in chaotic times. We face a binary choice: either act consistently on our plan through market fluctuations, trusting in a portfolio designed to support your specific goals, or abandon strategy amid uncertainty.

Human nature tends toward forgetfulness during crises, treating each new challenge as an existential threat. While today’s tariff concerns differ from COVID—they won’t, after all, claim your grandmothers life in a nursing home…..they represent another in a lifetime of equity market disruptions. As an advisor, I consider it my business, intellectual, and moral responsibility to remind us all of these truths. We can choose commitment to proven pathways or reactivity to temporary chaos. Ultimately, we must acknowledge the limits of our control and understanding of economic futures.

The Character of Market Trends

Markets rise because company earnings and dividends grow more over time than temporary declines erase in the short run. Equity investments comprise three inseparable elements:

1. Over the past century, the stock market has delivered a 10% average annualized return
2. Throughout the last 40 years, average peak-to-trough annual declines can average approximately 15%
3. Since the post-World War II era, we’ve experienced roughly one third market decline every five years

As equity investors, we must accept this complete package. The economy defies reliable forecasting, and consistent market timing remains elusive. Reacting impulsively can transform temporary declines into permanent wealth destruction, while patience creates long-term prosperity. We must remain steadfast through temporary declines—whether triggered by tariffs, COVID, financial crises, or the countless other “crisis du jour” moments throughout market history.

The Power of Patience

Now, imagine investing $100,000 in the S&P 500 in April 1975, 50 years ago. That investment would now be worth approximately $25 million—representing an 11.74% average annualized compounding return. This illustrates how innovation has enriched patient, plan-driven equity investors who simply maintained course through periods of both euphoric optimism and chaotic crisis.

The Path Forward

Beyond the power of love, human ingenuity and our collective capacity to adapt and overcome represent humanity’s greatest strengths. As an investor, understand that equities are the only asset class fully capturing human ingenuity and its remarkable potential.

While crisis periods naturally trigger knee-jerk reactions, I ask you to recognize our commitment—to you, to society, and to investors worldwide—to create portfolios supporting long-term, evidence-based, time-tested fundamental strategies. Know that my team and I stand ready to help you, your friends, family members, and colleagues navigate immediate uncertainty with clarity and confidence.