Investing Amid Uncertainty
Quick Take
Long-term investing prevails: Despite geopolitical and economic challenges, history shows that markets reward patience.
Core investment principles matter: Avoid market timing, withstand volatility, diversify across asset classes, and stay invested. These fundamental strategies help investors manage risk, capitalize on market growth, and build lasting wealth.
With the prospect of renewed tariffs under the Trump administration, many investors are understandably concerned about how trade policies could impact their portfolios. Markets dislike uncertainty, and history has shown that tariffs can cause short-term volatility—but as the S&P 500’s long-term trajectory reminds us, investors who stay the course are often rewarded.
Resilience Through Geopolitical and Economic Challenges
A striking takeaway from market history is the S&P 500’s resilience through economic and geopolitical challenges. A $1,000 investment in the S&P 500 in 1969 has grown to over $57,000, despite enduring stagflation, financial crises, recessions, wars, and shifting political landscapes.
Market downturns—such as Black Monday (1987), the Tech Bubble (2000s), the Global Financial Crisis (2008), and the COVID-19 crash—caused short-term volatility, but markets have consistently adapted and recovered. Even the challenges of the 1970s and 2008 did not prevent the S&P 500 from entering sustained bull markets.
The key takeaway: long-term discipline, strategic diversification, and staying invested are essential for navigating uncertainty. History has consistently rewarded patient investors.
Core Principles for Investing Amid Uncertainty
Avoid Market Timing – Predicting short-term market movements is unreliable and often leads to missed opportunities. The challenge is that market timing requires precise entry and exit points. Inevitably, most buy high and sell low. A disciplined, long-term strategy is key.
Volatility Is Normal – Market fluctuations are inevitable, and corrections are a normal part of investing (25 of the last 44 years had double-digit intra-year declines; 75% of those years the market finished in positive territory). Investors who maintain perspective and resist emotional decisions avoid costly mistakes.
Diversification Works – Spreading investments across asset classes, economic sectors, and geographies reduces risk and enhances long-term stability.
Staying Invested Matters – Time in the market, not timing the market, drives returns. Missing even a few of the best-performing days significantly impacts long-term growth. Interestingly, the best-performing days usually follow the worst performing days.
What It All Means
Markets will experience periodic downturns due to economic and geopolitical factors, but long-term investors who remain disciplined and diversified are best positioned for success. The S&P 500’s history underscores the importance of patience and strategic asset allocation in overcoming challenges. By adhering to these core principles, investors can navigate uncertainty with confidence and build lasting financial growth.
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DISCLOSURES: The information provided in this letter is for general informational purposes only and should not be considered an individualized recommendation of any particular security, strategy, or investment product, and should not be construed as investment, legal, or tax advice. Proffitt & Goodson, Inc. makes no warranties with regard to the information or results obtained by third parties and its use and disclaims any liability arising out of, or reliance on the information. The information is subject to change and, although based on information that Proffitt & Goodson, Inc. considers reliable, it is not guaranteed as to accuracy or completeness. Source information is obtained from independent financial data suppliers (Interactive Data Corporation, Morningstar, etc.). The Market Categories illustrated in this Financial Market Summary are indexes of specific equity, fixed income, or other categories. An index reflects the underlying securities in a particular selection of securities picked due to a particular type of investment. These indexes account for the reinvestment of dividends and other income but do not account for any transaction, custody, tax, or management fees encountered in real life. To that extent, these index numbers are artificial and cannot be duplicated in real life due to the necessity of paying those transaction, custody, tax, and management fees. Industry and specific sector returns (technology, utilities, etc.) do not account for the reinvestment of dividends or other income. Future events will cause these historical rates of return to be different in the future with the potential for loss as well as profit. Specific indexes may change their definition of particular security types included over time. These indexes reflect investments for a limited period of time and do not reflect performance in different economic or market cycles and are not intended to reflect the actual outcomes of any client of Proffitt & Goodson, Inc. Past performance does not guarantee future results.
