Wise Words from Wes

One of my favorite quotes has always been, "Volatility is the price we pay to invest," and it rings especially true today. The market has been tough over the past few days. A 10% drop in just two days to end last week is certainly no fun for anyone. It’s remarkable how quickly gains can be wiped out, and we’re already back at market levels we haven’t seen since February of last year.

What makes it "feel worse" is the third worst start to the first 64 trading days of the year since 1950.

What do 1987, 2008, 2020, and 2025 have in common? They are the only years since 1950 when the S&P 500 dropped 10% in just two days, with each of those days seeing losses of at least 4%. In fact, in both 1987 and 2008, this occurred twice in the same year. Needless to say, 6 times in 75 years is not very common.

That said, there’s some silver lining. Historically, we’ve seen positive returns 6 months and 12 months later—100% of the time—with some very healthy double-digit gains (as shown in the chart below). Yes, it is a small sample size and different environment (and it is always different) but strong, nonetheless.

Bonds and International Stocks Have Done Their Job

I can’t predict how tariffs will play out any more than the next person. There are too many uncertainties to forecast what’s coming. But even in times of uncertainty, there are still opportunities for long-term growth (especially for our younger investors. Keep saving!).

Diversification is more important than ever, especially with the current volatility in the markets. Bonds have played their role well recently, providing stability in a diversified portfolio (and finally showing their worth, especially for our retired folks!).

Additionally, international indexes have outperformed U.S. markets through the first quarter of 2025. While bonds and international markets may not have delivered significant returns in recent years, they are certainly proving their value right now.

Looking Ahead

It’s crucial to focus on the long-term. We don’t invest for short-term gains, and just like we’ve overcome past market declines, we’ll get through this one, too. In 2020 and 2022, we saw steep declines in the market. The S&P 500 dropped nearly 27% in 2022, dipping deep into bear market territory. However, it rebounded, gaining 7.6% in the fourth quarter, and ended the year down 18.1%. For many of you who have been with us for a while, you weathered that storm and reaped the rewards.

We’ll see positive outcomes from this downturn as well—though exactly when is hard to predict. History tells us that recovery is inevitable.

If you’re feeling concerned, don’t hesitate to reach out to us. We’re always here to talk to and support you.

Securities offered by Alexander Capital LP Member FINRA/SIPC. The above summary has been obtained from sources we believe to be reliable, but we cannot guarantee its accuracy or completeness. Past performance is no guarantee of future results. The article and opinions in this publication are for general information only and are not intended to provide specific advice or recommendations for any individual.