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How to stomach a down stock market
A stock market drop is like catching a cold: It happens now and then. We don’t always know why. It’s painful. And the less you do, the sooner you will recover. Chicken soup can be soothing.
Well, keeping with that metaphor, we now have a cold. We’ve been in a down market for much of 2025. So now what do we do? Surely we do something, right? That’s what our instincts say. We don’t like feeling crappy about our health or our investments. But decades of medical and financial history tell us the best thing to do – in fact the only thing to do – is wait for recovery.
Many get frustrated with this advice about their investments. But all the research tells us that waiting works. That same research tells us every other option – selling, moving to cash, waiting for “things to settle down,” not only doesn’t work, but usually makes things worse.
As I’ve written many times, the US stock market has averaged 11% per year since 1939. (morningstar.com). This is about all we need to know when managing long-term investments. To me, almost nothing else matters. I never make predictions, ever. So my advice is always to keep this fact in mind, and stomach the hard times.
I also want to remind you that your financial plan takes these things into account. If your plan projects a rate of return of 6% per year, that includes good and bad years.
A stock market drop should never hurt you. Does that seem like a bold statement? Well I mean it. Either you: 1) have a long time before you need your money, or 2) you have plenty of resources unaffected by the market, like Social Security, pensions, fixed annuities, CDs, etc.
So how do we get comfortable with being uncomfortable? Maybe these quotes will help. They are some of my favorites about how to handle down markets.
“Be greedy when others are fearful and fearful when others are greedy” – Warren Buffett. Meaning, when everyone is selling, buy if you can. Why? Because the market has always come back.
“Don’t just do something – sit there!” – Jack Bogle, founder of Vanguard
“Be the house, not the gambler” – Daniel Crosby. Everybody knows the house always wins in the long run, even though the gambler picks up a win occasionally.
“Prediction addiction is the compulsive desire to try to make sense out of everything, even events that are not predictable. Like the short-term direction of the stock market” – Jason Zweig
“Like anyone can even know that” – Kip, from Napoleon Dynamite. Meaning, no one can predict what’s coming next. This is great wisdom for life in general.
Uncertainty is harder than ever these days. It’s in our face all day long with constant news, weather and stock market updates. And of course the bad news gets the most attention and biggest headlines. You might have grown up with a daily paper, a weekly paper, a nightly newscast or a monthly magazine. At least you had some down time between the scary headlines! No more.
But the results haven’t changed, and long-term stock market performance has remained consistent through it all. Past performance does not guarantee future results.
Travis Ford, CFP®, is a partner and financial planner at Wallstreet Group Advisors in Jefferson City. 573-297-2049 or travis@wallstreetgroupadvisors.com. Securities and advisory services offered through CreativeOne Securities, LLC member FINRA / SIPC and an investment advisor. Wallstreet Group Advisors and CreativeOne Securities, LLC are not affiliated.
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