What Market Volatility Teaches Us About Long-Term Investing
The headlines have been relentless lately. With the announcement of sweeping new tariffs by President Trump — a universal 10% tariff on all imports, and even steeper rates on Chinese and European goods — markets responded with a sharp drop. China quickly retaliated with tariffs of its own. Investors are rattled, and the economic uncertainty is real.
It’s completely normal to feel unsettled in moments like this. Every news outlet seems to be shouting some version of “Is this the beginning of something worse?” But while today’s situation feels unique, what’s happening in the market isn’t.
In fact, this kind of market reaction is more common than most people realize. On average, a 10% drop happens about once every two years, a 20% drop every five, and a 30% drop roughly once a decade. These pullbacks are the price of admission for long-term growth — not a sign that the system is failing. While the cause of each downturn is different, the emotional response tends to be the same: worry, fear, and the temptation to do something.
But long-term investing isn’t about reacting. It’s about staying grounded in your plan, especially when uncertainty creeps in. It might help to remember that some of the strongest rebounds have followed steep declines. In 2020, for example, the market nose-dived in a matter of weeks — and still ended the year up about 16%. We saw something similar after the 2008 crisis. These moments of rapid recovery are a reminder that what feels like the worst time to stay invested is often the most critical time to do so.
Volatility Is the Cost of Opportunity
One of the most helpful ways to think about investing comes from David Booth, founder of Dimensional Fund Advisors, who recently wrote in the Financial Times:
“Each crisis can feel like the end of the world when it happens, yet the pattern of recovery stays remarkably consistent. Over 50 years of working in finance has consistently shown me two things: we cannot predict the future, but despite that uncertainty, markets have eventually bounced back…
Successful investing is about picking the right portfolio — and having the right mindset. A disciplined approach helps you handle uncertainty without freezing up. Accept uncertainty as the cost of opportunity — higher expected returns are your reward for taking on greater risk.”
— David Booth, Financial Times, April 4, 2025
Booth’s message mirrors what we try to emphasize with our clients at Dentist Advisors: the volatility we’re seeing now isn’t a flaw in the system — it’s a feature. Stocks offer better long-term returns than bonds or cash because they require withstanding periods of discomfort.
Trying to avoid these dips by “waiting for things to calm down” rarely works. The biggest rebounds often happen in the early stages of a recovery — before things feel calm. Miss just a few of the best days, and the long-term cost can be substantial. Booth notes that a $10,000 investment in the Russell 3000 index over the last 25 years would have grown to more than $66,000. But miss just the best three months? It drops to around $46,000 — a 30% difference.
It’s not about gambling or guessing. It’s about staying seated when it feels hardest to do so.
Stay Anchored to Your Plan, Not the News Cycle
If you’re feeling unsettled right now, you’re not alone. But it helps to remember that fear is part of the ride. Think of the market like the ocean. If you’ve been sailing in calm seas for a while, even a small wave can feel jarring. When a normal wave comes, it feels enormous. But the waves were always there — they just disappeared long enough for us to forget.
Trying to time the market — jumping out when it feels scary and back in when it feels safe — rarely ends well. And while the urge to “wait it out on the sidelines” is understandable, it’s important to ask: What exactly are we waiting for? Often, by the time it feels safe again, the recovery is already underway — and the biggest gains are behind us.
This is why we emphasize long-term strategy, thoughtful planning, and personal alignment over reacting to headlines. Every investor experiences volatility. The ones who succeed are those who respond with perspective and patience.
If you’re unsure whether your investment plan matches your comfort level or your goals, that’s a conversation worth having. But reacting to noise isn’t a plan — it’s just a reflex. And when it comes to your financial future, you deserve something better than a guess.
In times like these it’s nice to have a professional in your corner. So if you have a financial advisor, now’s a great time to check in with them. And if you don’t, we’re here to help — feel free to schedule a free consultation to talk through your questions and make a plan you can feel confident about.
Resources:
https://www.ft.com/content/7f38e24b-4947-4806-a88b-51aa0ae231b3
https://www.washingtonpost.com/business/2020/12/31/stock-market-record-2020
https://awealthofcommonsense.com/2022/01/how-often-should-you-expect-a-stock-market-correction