on May 6, 2025
As we’ve seen over the past few months, the stock market can fluctuate to wild extremes. It can dip with bad news (or even rumors of bad news) and soar with good news and optimism. But the whims of investors are not the backbone of the market. Rather, the market is a reflection and a representation of some of the top companies in both the nation and the world.
Why Does This Matter?
Businesses are tangible entities. They represent ingenuity, real products and services, and years (often decades) of strategy and growth. Not just any company is big enough, profitable enough, or innovative enough to be listed on the New York Stock Exchange or included in major US stock market indices, such as the S&P 500 or Nasdaq Composite. Furthermore, not just any company is included in respected, top-performing mutual funds. These companies have to prove their worth.
In other words, both the stock market and mutual funds are a reflection of thousands of great companies. That matters because it’s tough (if not impossible) to sink thousands and thousands of solid companies through economic or political policies, changes in federal leadership, or (the news media’s favorite topic) tariffs. These companies will innovate, adapt, and restructure to keep going—to keep achieving growth.
We’ve seen this time and again throughout history. Big changes occur, companies are impacted, and many (if not, most) survive. Additionally, new companies will inevitably emerge to take the place of the ones that did not make it through the tumult.
Trust in Companies
When you keep in mind that excellent companies are the backbone of the stock market, you realize that your investments are growing from a solid foundation. When you invest in a mutual fund, for example, you typically buy a small sliver of several thousand companies. Additionally, if the mutual fund is focused on diversification, those companies will represent many different industries, often both within and outside of the United States. This is the opposite of putting all your eggs in one basket. Instead, you are spreading your dollars over a wide range of businesses, which gives you excellent odds for success.
I trust in companies because they represent the heart of our nation. The US was founded on ingenuity and innovation, and that isn’t going away. The great companies of our nation will continue to invent, pivot, and provide much-needed products and services, despite hardships and obstacles.
I believe in the resilience of companies much more than I believe in “hot new” investment trends. Many of these trends are not built on anything concrete. Cryptocurrency, for example, is entirely dependent on the sentiments of investors. There is no physical currency, or anything backing a given cryptocurrency; it is all dependent on investors’ moods. And that is volatility waiting to happen. Conversely, the stock market can go through highs and lows, but the companies it represents are not so fragile. They are real and resilient.
The heart of my message is this: diversify your investments, stay the course, ride out any market fluctuations, and believe in the resilience and ingenuity of companies. History tells us that they will persevere, and they will emerge stronger than ever once the tumult passes.