History Favors the Patient Investor

This famous scene from Star Wars showed us how remaining calm in the face of chaos can make all the difference between success and failure. I know facing market selloffs can be frightening, but history shows they often lay the groundwork for substantial gains.

For example, on Friday, April 4, the S&P 500 was battered by a steep sell-off of 5.97%, with the Dow falling by 2,231 points.¹ Then, the following week on Wednesday, April 9, we saw the S&P 500 rise 9.5% and Nasdaq experience its biggest move upward since 2001!² Investors who sold on Monday in front of that were not happy.

Time and again we have seen that some of the worst downturns are followed by powerful recoveries. Those of us who have experienced historic market selloffs have also seen the dramatic rebounds that followed. Since starting this firm, I have endured the Dot-Com Bust (2000–2002), Global Financial Crisis (2008–2009), the COVID-19 Crash (2020) and several lesser selloffs in-between. Yet, each time, those who remained in the market enjoyed massive gains later.

From the Dot-Com bottom in 2002, the Nasdaq began a powerful ascent, culminating in a gain of over 1,000% by 2020.³ By March 2009, the 2008 market crisis bottomed—and what followed was one of the longest bull markets in history. From March 2009 to February 2020, the S&P 500 gained more than 400%. The COVID rebound was one of the fastest in history. The market bottomed on March 23, 2020, and within five months, the S&P 500 had fully recovered. By the end of 2021, it had gained over 100% from the lows.⁴

For those of us old enough to remember, October 19, 1987 is now remembered as Black Monday.⁵ The Dow Jones Industrial Average fell 22.6% making it the largest one-day drop in the Dow’s history. As a young advisor, it was my first experience guiding clients through such volatility. The substantial market selloff provided an opportunity worth exploring for one of my clients. After we discussed his options, he invested a portion of the cash he was holding in maturing CDs into the market at its low point. Less than two years later, US stock markets surpassed their pre-crash highs. This experience left a lasting impression on me and it allows me to offer some perspective to clients for dealing with what is currently in front of us.

Every investor’s situation is unique and I’m not recommending the above strategy for everyone. I do believe, however, that we can all learn valuable lessons from history:

• Volatility is normal. Markets move in cycles—periods of fear are often followed by resilience.
• Timing the market is nearly impossible. Missing just a few of the best days can dramatically reduce long-term returns.
• Staying invested works. According to Fidelity, from 1980 to 2020, the S&P 500 averaged an annual return of 11.6%—despite multiple recessions and crashes.

While no one can predict the future, studying the past can offer both perspective and hope. History is clear — markets recover, and those who stay invested tend to benefit most. While the future is never certain, a long-term perspective and disciplined approach offer the greatest chance of success.

Focus on what you can control. The pilots in the Star Wars movie did the impossible by remaining focused on the end game and destroying the Death Star. If we stay true to the mission, we can overcome all the outside noise as well. Stay confident in your portfolio. That’s why you choose to partner with us, so you don’t have to keep thinking about it.

Thanks for reading. (We’re going to be OK.)

¹ CNN.com April 4, 2025 https://www.cnn.com/2025/04/04/investing/stock-market-dow-tariffs/index.html

² MarketWatch April 9, 2025 https://www.marketwatch.com/livecoverage/stock-market-today-dow-eyes-700-point-dive-s-p-500-nasdaq-fall-treasury-yields-spike-as-tariffs-hit

³ Slickcharts Nasdaq 100 returns https://www.slickcharts.com/nasdaq100/returns

⁴ MFS Market declines: A history of recovery https://www.mfs.com/content/dam/mfs-enterprise/mfscom/sales-tools/sales-ideas/mfse_resdwn_fly.pdf

⁵ Federal Reserve History https://www.federalreservehistory.org/essays/stock-market-crash-of-1987