Over Time, Markets Have Proved Positive and Resilient - Butler Financial, LTD


Over Time, Markets Have Proved Positive and Resilient

When markets react, consider a broader historical perspective before changing your financial course.

Market downturns can often trigger emotional responses in investors. It happens. And even rapid upswings can impact your investing judgment in a negative way. That’s why a good first move during volatile periods is to contact your advisor for a conversation about what the numbers really mean.

Pullbacks throughout history

Pullbacks can make investors want to pull up stakes and run – a common reaction that’s often a mistake, especially for long-term investors. The right knowledge and historical perspective can help us avoid making investment decisions based on emotion rather than strategy.

By looking at the market over a long period of time, we’re provided with a true testament of resiliency. Each decline along the way felt terrible, and declines today feel just as bad. But when we track the overall growth the market has achieved, it’s clear that there are benefits to persistence, patience and commitment.


  • The stock market is cyclical.
  • You will likely encounter numerous pullbacks and/or corrections as a long-term investor.
  • A study of the stock market shows its resilience.
  • In the long run, the upturns have always been stronger than the downturns.

Stocks overcome bumps in the road

Source: Morningstar. This chart is for illustrative purposes only. Past performance may not be indicative of future results. There is no assurance these trends will continue. The market value of securities fluctuate and you may incur a profit or a loss. This analysis does not include transaction costs, which could reduce an investor’s return. The S&P 500 is an unmanaged index of 500 widely held stocks. An investment cannot be made directly in this index. Growth of $10,000 in the S&P 500 (1/31/40 – 4/2/20).

Patience has historically paid off

The market has tended to deliver more consistent, positive returns the longer an investment is held. The chart below looks at rolling returns over various holding periods. You’ll note that, over short periods such as one or two years, the range of returns stretches from very negative to very positive. However, over longer holding periods, the range of returns becomes narrower and more positive.


  • Generally, returns have been less volatile over longer holding periods.
  • Returns over time have been positive in most cases.
  • Dollar-cost averaging can help take advantage of volatility.

Holding period returns

As of 4/17/20. Source: FactSet and Raymond James Research. This example is for illustrative purposes only and is not indicative of the performance of any investment. It does not reflect the impact of taxes, management fees, or sales charges.

Especially during declines, your advisor can act as a sounding board for your concerns. By talking about current events in light of your overall financial plan, your advisor can help provide reassuring perspective to help you stay the course and take advantage of any opportunities that tumultuous markets can present.

Read the full
Weathering Market Volatility brochure

Past performance may not be indicative of future results. There is no assurance these trends will continue. The market value of securities fluctuates and you may incur a profit or a loss. Investing involves risk including the possible loss of capital. This analysis does not include transaction costs which would reduce an investor’s return. Dollar cost averaging does not assure a profit and does not protect against loss. It involves continuous investment regardless of fluctuating price levels of such securities. Investors should consider their financial ability to continue purchases through periods of low price levels.

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