I Have Lost Nothing in the Stock Market Because I Am Not Selling Today
By Mitchell J. Smilowitz, CPA
Over the last few weeks, we’ve seen significant volatility in major stock market indices. Investors are asking how the changes taking place in federal government funding, including the looming government shutdown, tariff policy and potential tax cuts will affect the U.S. and global economies. The markets don’t like uncertainty and these policy changes have created a great deal of confusion regarding federal policy.
How is a long-term, retirement investor to react?
One of our plan participants once sent me a cartoon. Cartoon character Bart Simpson is standing in front of a blackboard looking back at us. He’s writing:
- I have lost nothing in the stock market because I am not selling today.
- I have lost nothing in the stock market because I am not selling today.
- I have lost nothing in the stock market because I am not selling today.
- I have lost nothing in the stock market because I am not selling today.
You get the idea.
It’s hard to make rational decisions when so much uncertainty surrounds us. We feel compelled to do something to take control of our fate. As investors, we want to do something to manage the volatility in our investment portfolios. But sometimes the best thing to do – is nothing. As long-term investors, it’s never prudent to make changes based on emotions. Remember,
- I have lost nothing in the stock market because I am not selling today.
We saw this kind of volatility in the markets during the Great Recession of 2008. By the time the S&P 500 reached its lowest point in March of 2009, it had lost 56.8% -- more than half of its value. The S&P 500 regained everything it lost within four years en route to an 11-year bull market that saw the S&P 500 increase about 500%. As of today, the S&P 500 increased more than 800% since March 2009, despite significant downturns during the Covid pandemic and the last few weeks.
Staying the course as a prudent, long-term investor, worked.
- I have lost nothing in the stock market because I am not selling today.
Many people compare the stock market to a roller coaster. The trip up is slow and steady: click, click, click. You may scream on the way down as the car rattles and careens around corners. But you only get hurt if you try to jump off. Unlike a roller coaster, however, the stock market historically ends up higher than before.
- I have lost nothing in the stock market because I am not selling today.
Remember that volatility isn’t a problem with stock investing – it’s a feature. Think of the higher long-term returns stocks have traditionally provided as compensation for tolerating occasional, stomach-churning periods of volatility such as those we are currently experiencing.
- I have lost nothing in the stock market because I am not selling today.
The fundamentals of the American economy remain strong. As we’ve seen, the investment markets have, historically, rebounded. Once the markets stabilize, you can make a reasoned assessment about your portfolio. That is the time to evaluate your investment strategy and determine if you remain on course to meet your financial and retirement goals.
Remember Bart Simpson.
- I have lost nothing in the stock market because I am not selling today.
As always, please remember that past performance does not guarantee future results. However, historical performance provides some comfort that investment markets will rebound. If you have questions about your retirement account or want to discuss how market volatility is affecting your retirement savings, the JRB is here for you. Email us or call 888-JRB-FREE (572-3733).
March 2025
