Image by Marek Piwnicki
Whew! We went through a turbulent time in the markets last week. If you were like a lot of people, you may have been holding onto your armrests and wondering whether the tariff wars would kick off a recession.
Our Chief Product Officer Jason Britton on last week’s webinar helped those who joined put the volatility in context, take a deep breath, and relax. After all: if you’re investing for retirement, you’re likely investing with a long-term time horizon. If history is any indicator, your investments are likely to be ok when it comes to those long-term time horizons of 10+ years.
Stocks have been through crazy times before, and investors who have come out ahead have usually been the ones who weren’t reactive to news cycles, but just kept putting savings into diversified investment vehicles bit by bit over time.
Let’s put this market turbulence in context
The market is down 4% year-to-date through 3/18/25, but we’re up over 10% from a year ago and 31.76% from three years ago.
Just five years ago, when Covid hit, lots of people thought the end times might be coming. But if you had invested $10k in the S&P 500 index at the start of March 2020, and not touched it until today, you’d have $19,658 today (up 96%).
When the 2008 financial crisis hit, if you had stayed in the market, you’d be up 549.90% (9/15/2008-3/18/2025) today.
Sometimes putting current events into the context of the past helps to give us some perspective and remind us that, while the markets fluctuate, those who stay invested through the highs and lows can do really well over the long-term.
What caused the drop in stock prices?
A major driver has been the rapid and significant policy changes enacted by the new administration. Shifts in trade, immigration, and fiscal policies have created an environment of uncertainty, leading to investor apprehension.
Specifically, the implementation of new tariffs and adjustments to federal spending have rattled markets, with concerns about potential impacts on economic growth.
The sheer volume of executive orders and policy announcements has amplified this uncertainty, making it difficult for investors to accurately assess the long-term implications.
The tech sector has driven a large part of the growth of the US stock market over the past few years, especially because of the fast pace of innovation in artificial intelligence. Fear of a potential bubble burst within the technology sector is also adding to the nervous investor sentiment. With that said, the fundamental innovations in AI that have driven the growth of the tech sector are real and are already transforming how the world does business. Demand for AI products is not likely to go away.
What should we do with our investments during turbulent times?
If you’re saving for the long-term, for example in a retirement savings account, the same strategy that you’ve likely heard countless times in the past applies today: do nothing. Even if your investments have lost value over the past week or two, if history is any indicator, your investments are likely to continue to grow into the future when looking at long-term time horizons, especially if you don’t plan to access the money in the next ten years.
Dollar-cost-averaging, i.e. investing a small amount on a regular basis, such as every two weeks with your paycheck, can give you access to discounts on stock prices, like we’re seeing on days when the stock market is down, and keep you growing your savings when the stock market is doing well. It is an effective way to avoid trying to time the market, which unless you have a crystal ball, is tough to get right.
How can Sphere help?
If you care about investing your retirement savings in a way that can be both good for your wallet and good for the planet, we’re here to help. Go to www.oursphere.org/invest to learn how.
