It was a rough week for the market, and that’s an understatement. The S&P 500 lost 10% from Thursday through Friday as tariff panic swept across the globe.
*I’ve written extensively on the issue of tariffs and the effect on the market, so I won’t belabor that here. 🔗 See my most recent post on this subject.
The market is tempting you to make the classic mistake: thinking it’s different this time, causing you to derail your long-term financial plan and investment strategy.
And the market sell-off’s propaganda machine – the financial media – is right on queue with fear-inducing headlines that would have you believe the world is coming to an end. One of my recent favorites is: “The S&P 500 has erased more market value than it did during the global financial crisis.”
Well, technically, that’s true in dollar terms. But they fail to mention in that headline that the entire market capitalization of the S&P 500 was around $14 trillion in mid-2007. At the start of this year, that number was around $54 trillion. That’s kind of an important data point.
I’m not diminishing the massive losses of the last few days – only pointing out how headlines can be manipulated by the financial media to push a narrative of catastrophism.
I also fully understand that there is a political factor at play here. If you did not vote for Trump you’re probably very concerned right now. If you did vote for him, then you may be more willing to let this play out. I get that. I would encourage you to not let politics interfere with your financial planning or investment portfolio whatsoever.
Volatility and the inevitable drawdowns are the price of admission for equity investors. This “risk” is also the very reason that investing in the stock market has been the greatest wealth generation machine the world has ever known.
And corrections are a common occurrence. Granted, this one happened in ludicrous speed, but they are still common. The average year sees a stock market drop of 14%. However, most years still end in positive territory, averaging 9% gains.
I don’t know when or how this tariff meltdown will end, but I do know one thing with 100% certainty. It will end. Whatever the “crisis du jour” in the markets, it WILL end. And stocks will eventually turn the corner and begin the perpetual march upward and to the right again. It’s why we invest in stocks.
And this pullback is not just about tariffs. Sure, tariffs are a catalyst, but we are on the heels of two of the greatest years (2023-2024) in stock market history. It’s no secret valuations had gotten stretched. And the market, especially Big Tech, was priced for perfection. We were due.
If you’ll indulge me for a minute, we’ll take a trip down memory lane. I started my career in the investment industry over 25 years ago, in 1999. I was working for a fund company, and just my luck, that first year was on the tail end of one of the greatest bull markets in history. I was there just in time for the “Tech Crash” or “Dot-Com Crash” that crushed the market from 2000-2002. It was brutal. It was the worst crash since 1929.
In 2003, I joined my forever home, Financial Synergies Wealth Advisors. Five years later the market plunged into complete chaos as a subprime mortgage crisis evolved into the “Financial Crisis.” From its peak in 2007 to the depths of the crisis in 2009, the stock market lost over half its value. Now, and once again, this was the worst crash since 1929. I was on a roll 😉.
And from that recovery in 2009, we’ve had plenty of ups and downs and countless crises – including a global pandemic in 2020 and historic market meltdown in 2022.
Through it all, the stock market has persevered. From the end of 1999 (start of the tech crash) through 2024, the S&P 500 has gained 540%. Not bad.
Let’s zoom out even further and take a look at some of the major events since the Great Depression, including World War 2 and numerous geopolitical and economic crises that sent the market in a tailspin, only to have it recover and continue its journey higher.
And if we compare the performance of stocks vs. bonds and cash over that same time frame, we can clearly see the reward for accepting the risk and volatility of the stock market. Are cash and bonds less volatile? You bet. Will they enable you to reach your financial goals and maximize your retirement? Not likely.
It’ been a while since we’ve seen such a swift and dramatic downturn in the market. It’s never fun and it will test your resolve. You cannot time when to get in or out of the market. These shifts can, and usually do, happen swiftly and without warning. I could show you ten charts proving this point, but I’m not going to do that here.
Here’s what we want you to remember: times like these are why we build diversified portfolios and personalized plans. You are not just invested in the S&P 500 or the Nasdaq. Instead, your portfolio is designed to span a range of asset classes, sectors, and geographies to help cushion against volatility.
While market indexes may grab headlines when they swing, your strategy is built with long-term goals in mind, not short-term reactions.
If it’s any consolation, diversification is working…
Broadly speaking, bonds (Bloomberg US Agg) and international stocks (MSCI EAFE) are in positive territory for the year.
That said, this downturn is real – and it’s unsettling. So here’s what we can do:
- Focus on what we can control, like how we react, how we stay diversified, and how we manage risk.
- Avoid the urge to panic sell, which historically has been one of the costliest investor mistakes.
- Stick to your plan, which was designed with the realities of both good and bad times in mind.
- Remember that these tariff talks are still relatively new and we don’t know how things will play out yet.
It’s also worth noting that even in times like this, there are bright spots. Not every sector is falling, and some defensive areas like consumer staples have held up well. This reinforces why diversification matters – because we don’t try to predict the future, we prepare for it.
As we look to next week, I fully anticipate more volatility and craziness in the markets. If you’re feeling unsettled or just want to talk it through, we’re here. Just schedule a time to chat with your advisor. Your peace of mind is as important as your portfolio.
Sources: YCharts, Morningstar, Clearnomics
Concerns or questions about how your investment portfolio will hold up in the current market environment? Contact Financial Synergies today.
We are a boutique, financial advisory and total wealth management firm with over 35 years helping clients navigate turbulent markets. To learn more about our approach to investment management please reach out to us. One of our seasoned advisors would be happy to help you build a custom financial plan to help ensure you accomplish your financial goals and objectives. Schedule a conversation with us today.
More relevant articles by Financial Synergies:
Blog Disclosures
This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own financial advisors as to legal, business, tax, and other related matters concerning any investment.
The commentary in this “post” (including any related blogs, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Financial Synergies Wealth Advisors, Inc. employees providing such comments, and should not be regarded as the views of Financial Synergies Wealth Advisors, Inc. or its respective affiliates or as a description of advisory services provided by Financial Synergies Wealth Advisors, Inc. or performance returns of any Financial Synergies Wealth Advisors, Inc. client.
Any opinions expressed herein do not constitute or imply endorsement, sponsorship, or recommendation by Financial Synergies Wealth Advisors, Inc. or its employees. The views reflected in the commentary are subject to change at any time without notice.
Nothing on this website constitutes investment or financial planning advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. It also should not be construed as an offer soliciting the purchase or sale of any security mentioned. Nor should it be construed as an offer to provide investment advisory services by Financial Synergies Wealth Advisors, Inc.
Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Financial Synergies Wealth Advisors, Inc. manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
Any charts provided here or on any related Financial Synergies Wealth Advisors, Inc. personnel content outlets are for informational purposes only, and should also not be relied upon when making any investment decision. Any indices referenced for comparison are unmanaged and cannot be invested into directly. As always please remember investing involves risk and possible loss of principal capital; please seek advice from a licensed professional. Any projections, estimates, forecasts, targets, prospects and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Information in charts have been obtained from third-party sources and data, and may include those from portfolio securities of funds managed by Financial Synergies Wealth Advisors, Inc. While taken from sources believed to be reliable, Financial Synergies Wealth Advisors, Inc. has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. All content speaks only as of the date indicated.
Financial Synergies Wealth Advisors, Inc. is a registered investment adviser. Advisory services are only offered to clients or prospective clients where Financial Synergies Wealth Advisors, Inc. and its representatives are properly licensed or exempt from licensure. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
See Full Disclosures Page Here
Rough Week… the Market is Tempting You
It was a rough week for the market, and that’s an understatement. The S&P 500 lost 10% from Thursday through Friday as tariff panic swept across the globe.
*I’ve written extensively on the issue of tariffs and the effect on the market, so I won’t belabor that here. 🔗 See my most recent post on this subject.
The market is tempting you to make the classic mistake: thinking it’s different this time, causing you to derail your long-term financial plan and investment strategy.
And the market sell-off’s propaganda machine – the financial media – is right on queue with fear-inducing headlines that would have you believe the world is coming to an end. One of my recent favorites is: “The S&P 500 has erased more market value than it did during the global financial crisis.”
Well, technically, that’s true in dollar terms. But they fail to mention in that headline that the entire market capitalization of the S&P 500 was around $14 trillion in mid-2007. At the start of this year, that number was around $54 trillion. That’s kind of an important data point.
I’m not diminishing the massive losses of the last few days – only pointing out how headlines can be manipulated by the financial media to push a narrative of catastrophism.
I also fully understand that there is a political factor at play here. If you did not vote for Trump you’re probably very concerned right now. If you did vote for him, then you may be more willing to let this play out. I get that. I would encourage you to not let politics interfere with your financial planning or investment portfolio whatsoever.
Volatility and the inevitable drawdowns are the price of admission for equity investors. This “risk” is also the very reason that investing in the stock market has been the greatest wealth generation machine the world has ever known.
And corrections are a common occurrence. Granted, this one happened in ludicrous speed, but they are still common. The average year sees a stock market drop of 14%. However, most years still end in positive territory, averaging 9% gains.
I don’t know when or how this tariff meltdown will end, but I do know one thing with 100% certainty. It will end. Whatever the “crisis du jour” in the markets, it WILL end. And stocks will eventually turn the corner and begin the perpetual march upward and to the right again. It’s why we invest in stocks.
And this pullback is not just about tariffs. Sure, tariffs are a catalyst, but we are on the heels of two of the greatest years (2023-2024) in stock market history. It’s no secret valuations had gotten stretched. And the market, especially Big Tech, was priced for perfection. We were due.
If you’ll indulge me for a minute, we’ll take a trip down memory lane. I started my career in the investment industry over 25 years ago, in 1999. I was working for a fund company, and just my luck, that first year was on the tail end of one of the greatest bull markets in history. I was there just in time for the “Tech Crash” or “Dot-Com Crash” that crushed the market from 2000-2002. It was brutal. It was the worst crash since 1929.
In 2003, I joined my forever home, Financial Synergies Wealth Advisors. Five years later the market plunged into complete chaos as a subprime mortgage crisis evolved into the “Financial Crisis.” From its peak in 2007 to the depths of the crisis in 2009, the stock market lost over half its value. Now, and once again, this was the worst crash since 1929. I was on a roll 😉.
And from that recovery in 2009, we’ve had plenty of ups and downs and countless crises – including a global pandemic in 2020 and historic market meltdown in 2022.
Through it all, the stock market has persevered. From the end of 1999 (start of the tech crash) through 2024, the S&P 500 has gained 540%. Not bad.
Let’s zoom out even further and take a look at some of the major events since the Great Depression, including World War 2 and numerous geopolitical and economic crises that sent the market in a tailspin, only to have it recover and continue its journey higher.
And if we compare the performance of stocks vs. bonds and cash over that same time frame, we can clearly see the reward for accepting the risk and volatility of the stock market. Are cash and bonds less volatile? You bet. Will they enable you to reach your financial goals and maximize your retirement? Not likely.
It’ been a while since we’ve seen such a swift and dramatic downturn in the market. It’s never fun and it will test your resolve. You cannot time when to get in or out of the market. These shifts can, and usually do, happen swiftly and without warning. I could show you ten charts proving this point, but I’m not going to do that here.
Here’s what we want you to remember: times like these are why we build diversified portfolios and personalized plans. You are not just invested in the S&P 500 or the Nasdaq. Instead, your portfolio is designed to span a range of asset classes, sectors, and geographies to help cushion against volatility.
While market indexes may grab headlines when they swing, your strategy is built with long-term goals in mind, not short-term reactions.
If it’s any consolation, diversification is working…
Broadly speaking, bonds (Bloomberg US Agg) and international stocks (MSCI EAFE) are in positive territory for the year.
That said, this downturn is real – and it’s unsettling. So here’s what we can do:
It’s also worth noting that even in times like this, there are bright spots. Not every sector is falling, and some defensive areas like consumer staples have held up well. This reinforces why diversification matters – because we don’t try to predict the future, we prepare for it.
As we look to next week, I fully anticipate more volatility and craziness in the markets. If you’re feeling unsettled or just want to talk it through, we’re here. Just schedule a time to chat with your advisor. Your peace of mind is as important as your portfolio.
Sources: YCharts, Morningstar, Clearnomics
Concerns or questions about how your investment portfolio will hold up in the current market environment? Contact Financial Synergies today.
We are a boutique, financial advisory and total wealth management firm with over 35 years helping clients navigate turbulent markets. To learn more about our approach to investment management please reach out to us. One of our seasoned advisors would be happy to help you build a custom financial plan to help ensure you accomplish your financial goals and objectives. Schedule a conversation with us today.
More relevant articles by Financial Synergies:
Blog Disclosures
This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own financial advisors as to legal, business, tax, and other related matters concerning any investment.
The commentary in this “post” (including any related blogs, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Financial Synergies Wealth Advisors, Inc. employees providing such comments, and should not be regarded as the views of Financial Synergies Wealth Advisors, Inc. or its respective affiliates or as a description of advisory services provided by Financial Synergies Wealth Advisors, Inc. or performance returns of any Financial Synergies Wealth Advisors, Inc. client.
Any opinions expressed herein do not constitute or imply endorsement, sponsorship, or recommendation by Financial Synergies Wealth Advisors, Inc. or its employees. The views reflected in the commentary are subject to change at any time without notice.
Nothing on this website constitutes investment or financial planning advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. It also should not be construed as an offer soliciting the purchase or sale of any security mentioned. Nor should it be construed as an offer to provide investment advisory services by Financial Synergies Wealth Advisors, Inc.
Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Financial Synergies Wealth Advisors, Inc. manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
Any charts provided here or on any related Financial Synergies Wealth Advisors, Inc. personnel content outlets are for informational purposes only, and should also not be relied upon when making any investment decision. Any indices referenced for comparison are unmanaged and cannot be invested into directly. As always please remember investing involves risk and possible loss of principal capital; please seek advice from a licensed professional. Any projections, estimates, forecasts, targets, prospects and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Information in charts have been obtained from third-party sources and data, and may include those from portfolio securities of funds managed by Financial Synergies Wealth Advisors, Inc. While taken from sources believed to be reliable, Financial Synergies Wealth Advisors, Inc. has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. All content speaks only as of the date indicated.
Financial Synergies Wealth Advisors, Inc. is a registered investment adviser. Advisory services are only offered to clients or prospective clients where Financial Synergies Wealth Advisors, Inc. and its representatives are properly licensed or exempt from licensure. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
See Full Disclosures Page Here
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