Weathering the Storm
How to Navigate Market Uncertainty
We've seen a lot of uncertainty lately in the markets — and that can be scary, especially as we get closer to retirement or are already retired.
Questions like:
"How long will this last?"
"Will markets bounce back?"
"Should I make a change now?"
are some of the most common and understandable concerns we're hearing from investors right now.
When the market takes a sharp turn, it’s only natural to wonder what comes next and how long it might take to feel confident again.
Let’s start with where we are today.
Where We Stand
Over the past two months, markets have fallen sharply:
- The S&P 500 is down more than 17% from its February highs.
- The Dow has dropped more than 7,000 points.
What’s driving the decline?
It’s not just one thing — it’s a mix of economic and political uncertainty:
- Heightened trade tensions
- Aggressive new tariffs
- Public pressure on the Federal Reserve
- Ambiguity around future rate cuts
This combination has pushed many investors to the sidelines and sent volatility soaring.
Naturally, the question everyone is asking is:
“When will things turn around?”
While no one has a crystal ball — and as you’ve heard before — past performance doesn’t guarantee future results, long-term historical data can still offer valuable context.
How Long Do Downturns Typically Last?
Historically, based on over a century of S&P 500 returns (adjusted for inflation and including dividends):
- A 20% decline has taken as little as six months to find a bottom.
- Even deeper drops — like 40% or 50% — have often bottomed out within two years.¹
But recovering to previous highs takes longer:
- A 20% drop: around four years to recover
- A 30% drop: about seven years
- A 40% drop: nearly nine years²
Recoveries are more like rebuilding after a storm: quick damage, but a long, patient repair process.
Why This Might Feel Different
Since the Great Financial Crisis, U.S. markets have often rebounded quickly — sometimes within months.
That recent history has created a false sense of how recoveries typically unfold.
When you zoom out over a broader historical timeframe, it becomes clear:
Fast recoveries are the exception, not the rule.
Deeper declines typically require years, not months, to fully heal.
Reasons for Optimism
History shows that some of the strongest returns have come after the most difficult periods:
- Following the 10 worst calendar years since 1975, the S&P 500 delivered an average one-year return of 17.5%, compared to a 9.7% average across all one-year periods.
- Over three years, the average return was 56%.
- Over ten years, it was more than 200%.³
Again, past performance isn’t a guarantee — but history reminds us that long-term discipline has often been rewarded.
What You Can Do Right Now
Here are some time-tested best practices we apply with clients when markets turn volatile:
- Hunt for pockets of value
- Look for areas where long-term potential outweighs short-term noise.
- Keep a diversified portfolio
- Spread investments across regions, sectors, and asset classes to manage risk.
- Avoid trying to time the market
- Staying invested often yields better results than jumping in and out based on emotion.
- Rebalance when needed
- Adjust your mix of stocks and bonds to stay aligned with your goals.
- Consider downside protection
- Explore strategies or products designed to help buffer against volatility.
Bottom Line:
We can’t prevent market declines. But we can prepare for them, navigate through them, and stay focused on long-term outcomes.