Navigating Market Volatility: A Lesson in Patience and Perspective

In recent months, investor markets have faced uncertainty on multiple fronts. From geopolitical tensions to economic shifts, it remains unclear when this turbulence will ease. As history has shown, uncertainty fuels market price volatility. While professional investment managers possess the knowledge and expertise to determine when to act and when to remain patient, many new DIY investors who entered the market in recent years often lack the same level of experience and long-term perspective. These investors, whose primary focus is not investing, are more prone to emotional decision-making. 

Fear of missing out (FOMO) can work in two directions: investors rush to buy when markets rise and panic-sell when markets fall. This behavior amplifies market fluctuations. However, it is essential to recognize that market movements are a natural and necessary component of investing. Without price movements, there would be no potential for returns, making investing no more attractive than saving with a fixed interest rate. 

A recent graph (courtesy of Humans Under Management) illustrates this well, using the S&P 500 index as a proxy. Since the year 2000, markets have experienced significant intra-year declines each year. Yet, only six of these years resulted in a negative annual return. Over the past 25 years, the index has risen from 1,469 on 31 December 1999 to 5,841 on 14 March 2025, delivering an average annual return of 5.68%. 

The key takeaway? Market dips are as normal as birthdays—and just as inevitable. While logic tells us to stay the course, emotions can sometimes get the better of us. If you ever find yourself questioning your investment strategy, we are here to offer guidance and reassurance. Give us a call; we are happy to help.