S and P Rollercoaster Ride Did You Panic Sell?!

Up Up and...Down? The Market's Kryptonite!

Greetings citizens of Earth! It's your friendly neighborhood Superman here reporting from the stratosphere (where the view of the stock market is surprisingly clear). I've been keeping an eye on the S&P 500 and let me tell you it's been more turbulent than a flight through a meteor shower! From a high of 5,670 on April 2nd it plummeted to a low of 4,982 on April 8th. That's a drop of about 12%! Makes you want to retreat to your own Fortress of Solitude doesn't it? But fear not because like the Daily Planet I'm here to bring you the truth the whole truth and nothing but the truth – so help me Rao!

The Bounce Back: Faster Than a Speeding Bullet!

Now before you start hoarding canned goods and building underground bunkers the market has shown some serious resilience. It's bounced back faster than I can stop a runaway train! Some sectors are nearly back to where they were before those pesky retaliatory tariffs reared their ugly heads. So what's the takeaway here? Well it's certainly not to start trading like Lex Luthor scheming to steal your kryptonite stocks! It's a classic example of why trying to time the market during chaos is about as effective as Lois Lane trying to hide my secret identity with a pair of glasses.

Stick to the Plan: It's Not a Bird It's Not a Plane It's a Solid Strategy!

Investors my friends are better off sticking to a well thought out plan. Remember trying to time the market is like trying to outrun me – you might think you're making progress but in the end you're just wasting energy. Anyone who panicked and sold their stocks during the downturn hoping to buy them back later probably suffered more losses than Perry White when he misses a deadline. And downturns? They're as much a part of investing as green kryptonite is to my… well you get the picture.

Risk vs. Reward: A Super Sized Lesson in Economics!

Everyone knows that over the long haul stocks deliver a higher return than bonds. Why? Because investing in stocks is riskier than investing in bonds. Investors demand a higher rate of return (the risk premium) for the extra risk. It's like demanding extra fuel for my rocket boots when I'm flying through space – you gotta compensate for the added challenge! Larry Swedroe points out that U.S. equities returned 10.2% per year on average from 1926 through 2024 while one month Treasury bills returned only 3.3%. The S&P 500 has risen in three out of every four years for the past century. That's a pretty super track record if you ask me!

Volatility: The Price of Greatness (and Returns)!

But that higher return comes with more volatility. My pal Ben Carlson wisely notes that stocks fall by 5% roughly two to three times a year 10% every year or two and 20% or more roughly once every 4 to 5 years. Declines of 20% or more are fairly rare but do happen. The recent peak to trough decline was roughly 12% but we almost hit a 19% drop. That's dangerously close to a bear market! These kinds of declines are the price we pay for higher returns. “Thus if investors want stocks to provide high expected returns bear markets (while painful to endure) should be considered a necessary evil,” Swedroe writes. It is where mental discipline really comes in!

Mental Discipline: Stronger Than Steel!

Investors need to fight the urge to do something rash when there's market chaos. “The first key to successful investing is to have a well thought out plan that includes an understanding of the nature of the risks of investing,” Swedroe says. Sticking with that plan requires real mental discipline and understanding. It's just like me fighting Doomsday – you need a plan a strategy and the willpower to see it through! Studies show that investors underperform their benchmarks because excess trading reduces their returns. Greed and envy take over in bull markets while fear and panic take over in bear markets. That is why it is important to have a plan and mental fortitude. Disabuse yourself of the notion that you can trade your way out of a chaotic market. "Trying to time the market is a loser's game — one that is possible to win but not prudent to try because the odds of doing so are so poor," Swedroe says. The best way is to stick to long term investing in low cost index funds and to remember that excitement and expenses are your enemies. And when you see you are down on the year understand that this is a part of investing. There are some bad days but in the long run the good ones outnumber the bad ones.