on April 8, 2025
Whether you believe it or not, we’ve been here before. Sure, we haven’t experienced these exact circumstances in this precise context, but we, as a nation, have experienced long stretches of uncertainty and “unprecedented events” and we have always gotten through them. That’s why I believe in moving forward, treating this era with a “business as usual” attitude.
Why am I so optimistic?
As a financial advisor who cares deeply about my profession and constantly engages in self-education, I am a student of history. Specifically, I have familiarized myself with the history of the market, how investments have been affected by certain historical events, and how investors tend to react to those events. We can look at fraught moments in history when times were uncertain and the market either plummeted or gradually slid downward. We have been through various wars, the dot-com bubble bursting, 9/11 (and the uncertain aftermath), the Great Recession of the mid-2000s, COVID, and much more. During each of these periods of tension and uncertainty, two things typically happen:
- People tend to panic (often whipped up by the “doom and gloom” media) and
- The market suffers (temporarily)
Sometimes the market enters a difficult period for weeks, several months, or even a year or more. In every case, however, it has not only recovered but has come roaring back. In every case, those who stayed the course and stuck with their investment plans emerged that much stronger and that much more profitable than those who panicked and changed course.
Why stick to “business as usual?”
If you’ve been working with a trustworthy, competent, and prudent financial advisor, you have already established a great plan. You’ve discussed your long-term goals and aspirations, you’ve gone over your unique circumstances, and you’ve put a plan into place (with your financial advisor’s guidance) that reflects this information. Additionally, if you’re a responsible and active investor, you periodically check in with your financial advisor to touch base and see if your portfolio should be rebalanced. You also contact your financial advisor whenever you undergo a major life event (a divorce, a medical diagnosis, a new child, a new home) to update and adjust your financial plan accordingly.
If you’re already doing all these things, chances are, you’ll be fine. (If you have not recently touched base with your financial planner, let this be a friendly reminder to do so!) The reason I believe you will be fine is because the long-term thinkers and strategizers are the ones who fare the best during eras of uncertainty. They are the ones who stay the course, understanding that the market has always (over its centuries-long history) corrected itself and has continued to march forward, with the highs always outweighing the lows.
On the other hand, when people become fearful and caught up in the everyday fluctuations of the market, they tend to act irrationally. They may move their investments, buy a trending investment product, or simply change course (breaking from their carefully established plan). Responsible investing is not governed by kneejerk reactions and emotions. It should not be motivated by apocalyptic reporting or politics or by the ups and downs of the market. If you think long-term (as I’ve discussed in past blog posts), you will see that plodding forward with a robust, diversified investment plan (i.e. business as usual!) is almost always the best way forward.
If your go-to-news outlets, your friends and co-workers, or social media have become panicked and reactionary, I advise you to take a step back and tune out the noise. Resist the temptation to check the market’s performance or log in to view your investments’ standing. You may not like what you see in the short term, but history tells us that market turmoil (and economic turmoil, in general) is absolutely normal, and this, too, shall pass.