Why Is Everyone Freaking Out (But Us)?

Investors are currently facing a wall of worry -- persistent inflation, tariffs, government budget cuts, layoffs and concerns about consumer confidence. As a result, the US stock market reached “correction” territory in March, meaning the market declined by more than 10%.

While corrections happen every few years, this one feels different for many investors due to the dizzying array of negative news stories. Despite the volatility in the market, we are not worried. And we don’t want you to worry either.

What is keeping us so calm?

⦁ We expect markets to be volatile. There have been 27 market corrections since November 1974 -including the current one—and only six of them became bear markets (declines greater than 20%. The six bear market years were: 1980, 1987, 2000, 2007, and 2020.

⦁ We have lived through a lot of bad news in the past 2025 years!

⦁ Dot-com Bubble (2000-2002)

⦁ Enron Scandal (2001)

⦁ The Great Financial Crisis (2007-2009)

⦁ Bernie Madoff's Ponzi Scheme (2008)

⦁ European Debt Crisis (2009-2012)

⦁ “Flash Crash” (2010)

⦁ Downgrade of the US credit rating (2011)

⦁ COVID-19 Market Crash (2020)

⦁ The Russian invasion of Ukraine (2022-present)

Bear markets don’t last very long. Since 1966, the average bear market has lasted just 14 months, while bull markets last over 5 years. Some bear markets end very quickly – for example the COVID-19 pandemic bear market in 2020 lasted a mere 33 days.

We know that investing involves time. And we understand that the longer we invest, the more we reduce our chances of losing money. In any given year, there is a 26% chance of losing money in a diversified portfolio of stocks. Extend the time period out to 5 years, and those odds get cut in half. Historically (dating back to 1926), there is no timeframe where investors lost money in a diversified stock portfolio over a 15-year period.

Chart source: JP Morgan

We know that it is impossible to time the market. If you have the foresight to sell out of the market before the collapse, you also must have a crystal ball to tell you when to buy back into the market. Historically, investors have been rewarded for staying the course. Looking at the 2007 financial crisis as an example – the investor who stayed fully invested earned 50% more returns than the person who sold their stocks and waited a year before reinvesting.

Chart source: Morningstar

We know that diversification still works, even now! Yes, US stocks are down in 2025, but there are SEVERAL investments that have produced gains this year, including: Gold (+15%), International stocks (+11%), Bonds (+3%) and Value Stocks (+2%).

What should I be doing now?

If you're flying without a financial plan, it's time to map out your route. Having a written plan can really help you stay calm when markets get rough, because you know you're prepared for the bumps. If you need help from a financial advisor, please contact us here: www.momentum-advisors.com/contact

Understand your personal risk tolerance. While market gains encourage risk-taking, downturns expose your emotional limits. Evaluate how much potential loss you can realistically handle, both financially and emotionally.

Keep your portfolio strategy intact by rebalancing every so often. Market changes can really mess with your original plan, making some investments too big and others too small. Rebalancing is just selling the winners and buying the losers, to get things back in line.

For more information, please check out our accompanying podcast episode: https://open.spotify.com/episode/5h7mJyoSRcG2HDAus0QlIQ?si=MQiBwzMzRi-dqwOttNahTA

Investment Disclaimers & Risk Considerations

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Momentum Advisors, LLC-“Momentum”), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Momentum.

Please remember that if you are a Momentum client, it remains your responsibility to advise Momentum, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Momentum is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Momentum’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request.

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