By William F. Davis, CFP® | Vericrest Private Wealth
Markets have been anything but boring lately. Tariffs, headlines, rate uncertainty, geopolitical noise — take your pick. And when the news cycle gets loud enough, it’s natural for investors to start asking the same question: Should I get out and wait this out? It’s a reasonable thought. It’s also, historically speaking, one of the most reliable ways to hurt your long-term returns.
Let’s talk about why staying invested — even when it feels uncomfortable — is typically the right move.
1. Stocks have a long track record of recovering from everything.
Market corrections feel significant in the moment. They feel like signals. They’re not.
Since 1950, the U.S. has gone through 11 recessions. And while those periods were certainly stressful, stocks actually finished higher than where they started in five of those eleven recessions. Historically, equities have delivered average annual returns of around 15% since 1950 — setbacks included. The market doesn’t recover despite volatility. It recovers through it.
The chart above illustrates this clearly. Every dip that looked catastrophic at the time looks like a small blip with a little perspective behind it.
2. Missing just a handful of the best days is costly. Very costly.
Here’s the part that surprises most people: some of the best days in market history have occurred during bear markets — not after they’re over. Which means that investors who step aside to “wait for things to settle down” often miss exactly the days that matter most.
The data on this is fairly striking. A hypothetical investor who missed just the 5 best market days since 1988 would have reduced their long-term gains by 37%. Miss the 10 best days? Even worse. Miss the 30 best? You’d have actually lost money on what should have been a long-term growth investment.
The market doesn’t send out a calendar invite when it’s ready to bounce. You have to be there.
3. Cash isn’t as safe as it feels.
When volatility spikes, cash feels like a refuge. And to be fair, your account balance stops moving — which is psychologically comforting. But here’s the thing: the number staying flat isn’t the same as your purchasing power staying flat.
Inflation is relentless and quiet. If you’re earning 4% in a money market account while inflation is running at 4%, you’ve broken even in nominal terms — but you haven’t kept up in real terms. Over time, sitting in cash while waiting for the “right moment” to invest is itself a form of risk. A diversified portfolio of stocks and bonds has historically done a much better job of keeping ahead of inflation than short-term instruments.
That’s not an opinion — it’s decades of data.
So what should you actually do?
A few things worth keeping in mind when markets get rough:
First, make sure your emergency reserves are intact. If you know you have three to six months of essential expenses covered in liquid savings, you’re far less likely to make reactive decisions with your investment portfolio. Panic selling is almost always a liquidity problem disguised as a market opinion.
Second, revisit your allocation. If market volatility is keeping you up at night, the issue may not be the market — it may be that your portfolio is carrying more risk than you’re actually comfortable with. That’s a planning conversation worth having, not a reason to flee to cash.
Third, stay disciplined. Research consistently shows that investors who maintain their long-term strategy — rather than reacting to short-term headlines — end up in a better position. In 2023 alone, the average equity fund investor underperformed the S&P 500 by 5.5%. Not because markets were bad. Because investor behavior was.
The Bottom Line
Markets go up. Markets go down. Headlines will always provide a compelling reason to do something. But in 15+ years of working with investors, I’ve found that the ones who build wealth over time are almost never the ones who got the timing right. They’re the ones who stayed the course when it was uncomfortable — and had a plan to begin with.
If you’re questioning whether your current strategy still makes sense given everything going on, that’s worth a conversation. That’s exactly what we’re here for.
