Think back for a moment to the early part of last year. The stock market fell nearly 20-percent from the middle of February to early April. It almost met one widely held definition of a crash and caused plenty of people to wonder if the time had come to abandon equities.
That would have been a mistake. The S&P 500 increased around 16-and-a-half percent last year and hit multiple record highs. Patient and disciplined investors capitalized, while anyone who panicked missed out on some of those gains.
The truth is, there was not much out of the ordinary in 2025. If you read the numbers starting in 1928, you’ll see that seven-times a year– on average – the Standard & Poor’s index has declined by three-percent. This past year was no exception.
All of this gets back to the notion that it’s often wise to develop a long-term strategy, stick with it and forget about trying to outsmart the market.
If you plan properly, there’s really no need to even try to outperform markets and here’s why. My experience is that a properly funded portfolio with a seven-to-eight percent annual return is enough to get you retired and keep you retired. Then there’s this – if you place your funds in that same S&P 500 index and did nothing at all, the data show that you’ll likely get a ten-percent return.
One final point – markets and politics are not conjoined. Sure, the political environment can influence market performance, but stocks are good at shrugging off the ruminations in Capitol buildings, including the one in Washington D.C. It might be useful to think about politicians and finance with different parts of your brain. Disagree if you wish, but I’m convinced you’ll have fewer worries if you do.