If you followed the proverb and sold in May and went away due to all the market pain earlier in 2025, you missed out.
Eddy Elfenbein has the numbers:
For the month, the S&P 500 gained 6.15%. If we include dividends, then the market was up 6.29%…
After suffering a major scare earlier this year, it’s amazing that we’re not far from new all-time highs. For the last two weeks, the S&P 500 mostly traded within a narrow range. In thirteen of the last 15 trading sessions, the S&P 500 has closed within 1% of 5,900.1
If I had told you during the frenzy around tariffs that we’d be up 2% on the year and not far away from all-time highs during the first week of June, you probably wouldn’t have believed me.
All the narratives in April screamed fear and selling pressure. Political theatre and personality driven politics didn’t help and likely are not over.
The stories we tell ourselves around stocks will change constantly if you base them on the sentiment of the moment. You must have a larger story guiding you than the latest news feed.
As the above chart reveals, even though drawdowns happen year after year, most of the time stocks end the year up.
What if we go back into a bear market?
If you are a long-term investor, you will. Your odds of hitting a bear market increase the longer you are in stocks.
Reacquaint yourself with that feeling you had in April to make sure that you have an investment portfolio that can endure the amount of money you have in stocks. It is always better to do this when markets are back up then when they are back down.
And that recovery was quick. What will you do if its longer?
Morningstar presents how big the drops can be and how long it can take to get back above peak value.2
Lost decade, anyone?
I’m not trying to scare you. I’m reminding you that pain is a part of the investment process. It can be unrelentingly long or surprisingly short.
Don’t miss the point. Look at that chart again.
Cumulative real wealth went from $1 to $28,630 over that time period.
Though no one is still alive from when Ulysses S. Grant was president, the lesson remains: those that held on through the pain over a lifetime grew.
Pain can be an opportunity to grow in life and in investment portfolios.
Reality bites. It also reaps rewards.
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1. “CWM Market Review - June 3, 2025”. Accessed online: https://open.substack.com/pub/cws/p/cws-market-review-june-3-2025?r=cqam6&utm_campaign=post&utm_medium=email
2. “What We’ve Learned from 150 Years of Stock Market Crashes”, Emelia Fredlick, May 16, 2025. Accessed online: https://www.morningstar.com/economy/what-weve-learned-150-years-stock-market-crashes