Summary
Market uncertainty can spark emotional decisions that compromise long-term goals. At Alpine Hill Advisors, we believe that history rewards patient, disciplined investors who maintain perspective during downturns. From major bear markets to global financial crises, those committed to diversified, balanced portfolios have seen markets recover and grow over time. In this post, we explore why resisting the urge to time the market, leveraging diversification, and focusing on what you can control are key to weathering volatility and achieving lasting financial success.
Stay the Course. Volatility is Normal – and Temporary
Brandon Pacilio
Summary
Market uncertainty can spark emotional decisions that compromise long-term goals. At Alpine Hill Advisors, we believe that history rewards patient, disciplined investors who maintain perspective during downturns. From major bear markets to global financial crises, those committed to diversified, balanced portfolios have seen markets recover and grow over time. In this post, we explore why resisting the urge to time the market, leveraging diversification, and focusing on what you can control are key to weathering volatility and achieving lasting financial success.
We believe this is a time when the importance of the advisor-client relationship is at its peak. Difficult markets can often lead to emotional decisions that aren’t necessarily aligned with your financial goals. As your advisor, we are here to help you keep perspective, avoid rash decisions and offer guidance on how best to protect your assets for the long term.
Market downturns are never comfortable for any of us. However, looking back over the last 70 years, investors who stayed committed to a balanced strategy have been rewarded. Our research suggests that after every major downturn, whether it was the 1973-74 bear market, the 2000-2002 tech bubble burst, or the 2008 crisis, markets not only recovered but reached new heights.
History favors the patient investor. Since the S&P 500’s inception in 1926, the index has generated an average annual return of about 10%. But that return didn’t happen in a straight line. Along the way, investors had to endure the Great Depression, Black Monday in 1987, the dot-com bubble burst in the early 2000s, the Global Financial Crisis of 2008, and the COVID-19 pandemic crash in 2020. Each time, markets recovered, and those who stayed invested reaped the rewards.
Don’t try timing the market. Pulling money out of the market during a downturn often leads to missing the rebound. A landmark study by J.P. Morgan Asset Management found that from 2003 to 2022, the S&P 500’s annualized return was 9.8%. However, if an investor missed only the 10 best days of performance during that period, their return dropped to 5.6%. Missing the 20 best days cut returns to 2.9%. 1 Additionally, seven of those 10 best days occurred within two weeks of the 10 worst days. 2 These statistics reinforce the idea that timing the market on a daily and weekly basis can work against you. Staying invested increases the likelihood you don’t miss those powerful rebounds.
Leverage the power of a diversified portfolio. A diversified, balanced portfolio that includes a well-devised fixed income strategy can be one of the most effective means to weather such turbulent markets. For instance, over the years a 60/40 portfolio (60% stocks, 40% bonds) has weathered volatility better than an all-equity portfolio. Today, diversification remains the most sensible approach in the face of uncertainty. Portfolios should be built for a range of scenarios, which underscores the role of bonds as a stabilizing force amid market downturns. 3
Market ups and downs are nothing new. Over the last century, investors have faced significant challenges including world wars, financial collapses and pandemics. And yet, despite these challenges, markets have continued to trend higher over time.
Final Thoughts: Focus on What You Can Control
Market volatility is inevitable, but we are not powerless. Building and maintaining a diversified, balanced portfolio is one of the best defenses against uncertainty. Markets eventually recover, and those who stay invested tend to benefit most. When the market feels most uncertain, it’s often the most important time to stay in the game.
At Alpine Hill Advisors, our expertise in fixed-income and our approach to equity markets by buying low cost, tax efficient, diversified ETFs allows us to provide not only protection but flexibility, offering stability in the storm and dry powder for the rebound. If you would like to discuss anything regarding my comments here or anything regarding your portfolio, please feel free to reach out.
Thanks for reading.
Brandon
1 J.P. Morgan Asset Management analysis using data from Morningstar Direct. https://www.jpmorgan.com/insights/investing/investment-strategy/what-is-a-portfolio-line-of-credit
2 CNBC.com April 7, 2025 https://www.cnbc.com/2025/04/07/selling-out-during-the-markets-worst-days-can-hurt-you-research.html#:~:text=In%20all%2C%20seven%20of%20the,onset%20of%20the%20Covid%20pandemic
3 Macrotrends S&P 500 Historical Annual Returns https://www.macrotrends.net/2526/sp-500-historical-annual-returns
The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.
The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. All investments include a risk of loss that clients should be prepared to bear. The principal risks of Alpine Hill strategies are disclosed in the publicly available Form ADV Part 2A. Although fixed income generally present less short-term risk and volatility risk than stocks, fixed income does contain interest rate risks, the risk of issuer default, issuer credit risk, liquidity risk, and inflation risk. Alpine Hill Advisors LLC (“Alpine Hill”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Alpine Hill and its representatives are properly licensed or exempt from licensure. Please visit our website https://alpinehilladvisors.com for important disclosures.
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