July 2025 was a good month for the stock market.
More than two percent doesn’t sound like much, but that’s half of what a US Treasury Bill or many CDs will pay over an entire twelve months.
If we go back a decade, large US stocks are up over 264%.
Not all decades are like this though. Sometimes investing for a decade in equities loses money.
-2.6% a year for 10 years is not a lovely selling point for a stock salesman.
Good thing we are wealth managers—managing assets of many kinds within a client’s financial goals and risk tolerance—not stock jocks.
Recently, some Wall Street forecasters have been calling for a near term pullback between 10 and 15%.1
We don’t make predictions, and oftentimes our job is to help clients ignore them, but it is always good to remember the ebbs and flows of the market and what that means for the goals your investment portfolio is synced with.
Remember there is ALWAYS a risk for stocks to drop. Headlines warning of declining stocks could be a press release for any day of the year. Furthermore, there is also the risk to leapfrog that risk right into another one—being wrong and stocks moving higher.
Forget the risk of a short-term pullback for a minute and imagine the risk of a long term one.
What would you do if you lost a decade by being invested in stocks? That’s always worth factoring into your risk scenarios.
However, one could flip that idea on its head too. What if you continued investing during a lost decade? What investment returns might come in the one after that for you or your future heirs?
Even the ones who are saying that in the near term there will be a pullback are also, according to Bloomberg, saying:
In the event of a dip, buy it.2
I believe it was investor Peter Lynch who said: “The key to make money in stocks is not to get scared out of them.” There has been much hard-earned wisdom in that statement.
But it is also prudent to make sure that you have enough money outside of stocks, so that when you are most prone to get scared out them in a fast sell-off or a brutally tedious year-after-year decline, that choice would not derail your present or your future.
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Sources:
1. Wall Street Is Warning Investors to Get Ready for Stocks to Drop”, Alexandra Semenova and Jess Menton for Bloomberg on August 4, 2025. Accessed online: https://www.bloomberg.com/news/articles/2025-08-04/wall-street-is-warning-investors-to-get-ready-for-stocks-to-drop