September 2025 | Peterson Wealth

Sticking with a long-term investment strategy not only takes financial knowledge—it also takes emotional strength. You must believe that your money will work for you, even when the headlines are loud, the markets are noisy, and your confidence feels shaken. The challenge isn’t just understanding how investing works—it’s committing to a way of thinking that keeps you steady during the highs and the lows.

Long-term investors succeed because they learn to hold two truths at once: faith that the future holds opportunity, and discipline to stay the course even when today feels uncertain. This isn’t blind hope. It’s clarity about your values, goals, and the historical patterns that reward patience. Investors who thrive don’t react to every market twist. They lean into a mindset that favors conviction over reaction, and resilience over impulse.

Three Hard Truths Every Investor Must Accept

Contrary to popular belief, long-term investing isn’t about perfect timing of flawless predictions; it’s about recognizing what you can control and learning to live with what you can’t. Many investors come into the process thinking they’ll find a path free of stress, losses, or surprises. However, that’s not how wealth builds over time. To invest for the long haul, you need to accept a few uncomfortable truths upfront:

1) There’s always a crisis: Somewhere in the world, something unsettling is always happening—wars, elections, trade battles, economic downturns, or new headlines meant to grab your attention. If you’re waiting for a perfect moment of calm before investing, you’ll wait forever. Markets don’t reward perfection—they reward participation. Missing out while waiting for stability is often one of the costliest choices you can make.

2) Volatility is a feature, not a flaw: Market ups and downs aren’t glitches in the system—they are the system. Big drops, even of 10%, 15%, or more, show up regularly. That unpredictability isn’t a sign something is broken. It’s a part of how returns get earned over time. Long-term investors expect this. They don’t get scared out of the market when it happens—they plan for it in advance.

3) You won’t see it coming: Trying to guess when the market will rise or fall is a losing game. The turning points never announce themselves. Economic slumps don’t wait for you to shift your strategy. When things “feel safe,” the market has often already moved. Predicting the right moment to act is more guesswork than science, and it rarely works twice.

Please Note: You don’t need to forecast every surprise in the market. You just need to stay in. The people who consistently build wealth aren’t the ones with the best predictions—they’re the ones who accept uncertainty and stick with their plan. Staying invested through the noise often beats even the most sophisticated attempts at jumping in and out.

Volatility Doesn’t Derail Long-Term Growth

When the market dips sharply, it’s natural to feel alarmed. However, history tells a different story than our instincts. Sharp declines might dominate news cycles, but time has healed the market every time. More often than not, the market rebounds—sometimes quicker than anyone expects.
Here are some examples to keep in mind:

1987 – Black Monday’s Stunning Collapse and Fast Rebound: On October 19, 1987, the Dow Jones Industrial Average plunged 22.6% in a single day—still the steepest one-day percentage drop of all time. Panic spread fast, and many braced for an economic freefall reminiscent of the Great Depression. But what happened next surprised most observers: despite the sharp hit, the market began recovering within days, and in under two years had reached new highs.1

2000–2002 – The Dot-Com Collapse and Long Climb Back: The early 2000s saw tech stocks soar to stratospheric valuations on the back of internet hype. But when the bubble burst, the Nasdaq Composite fell more than 75% from its peak. Companies with shaky business models vanished overnight, and it became clear how much irrational exuberance had inflated the sector. Recovery wasn’t quick—tech investors waited 15 years before seeing the Nasdaq hit new all-time highs.2 Still, this long cycle was a reminder that even the most dramatic corrections eventually settle and rebuild.

2008–2009 – The Great Recession and the Slow, Steady Return: When the housing market collapsed and the financial system teetered on the edge, the S&P 500 lost over 50% of its value. Banks failed, consumer confidence disappeared, and the global economy felt deeply unstable. The damage was severe, and it took years of policy support and gradual economic repair for confidence to return. But by March 2013, the market had not only recovered it started setting all-time high records again.3

2020 – The COVID Crash and One of the Fastest Recoveries on Record: As the pandemic spread across the globe in early 2020, the market fell hard and fast. The S&P 500 dropped about 34% in just 33 days, marking one of the most abrupt declines in modern history. Fears of a deep and extended recession loomed. Yet within months, the market had bounced back. By August—just five months after the low—major indices had regained all of their losses.4 This example provides a stark (and recent) reminder of how quickly things can turn around, even in the face of a once-in-a-century crisis.

Please Note: It’s typical for the S&P 500 to experience a decline of about 14% from its high point during the middle of the year. Yet even with those temporary drops, the index finishes in positive territory nearly 75% of the time.5 Noticeable market drops (and full recoveries) are common every year, not just in the extreme examples like the ones above. The point is, if you’re aiming for long-term growth, short-term setbacks aren’t just possible—they’re part of the deal.

Time Flattens Risk and Boosts Your Odds

The longer you stay invested, the better your odds of a positive outcome. Markets may be unpredictable day to day, but over a long enough period of time, the positive patterns become much clearer:

Short-term vs long-term probabilities: If you’re only invested for a day, your odds of a gain are just slightly better than a coin toss (54%).6 Stretch that out to one year, and your odds improve significantly (70%).7 Hold for 5 years, and your chances of a positive result climb even higher, and once you hit 10 years, things become virtually certain. Studies have shown that over the past 82 years, any investment in the S&P 500 held for 10 years had a 100% chance of a positive return.8

Return ranges narrow over time: The swings in performance also shrink the longer you hold. Over one year, you might see returns as high as 50% or as low as -40%. But look at a 30-year timeframe, and those extremes compress, ranging from substantial gains to modest ones.

Even bad timing can pay off: Investors who entered the market just before major crashes—like the 2000 dot-com bust or the 2008 financial crisis—still came out ahead if they held on. Buying at a peak isn’t ideal, but staying invested gives their money time to recover and grow. The real damage usually happens not from buying high, but from selling in panic.

Compounding Turns Time Into a Tool: Growth in the market doesn’t just stack—it snowballs. The power of compounding means your gains generate their own gains, creating momentum that builds over the years. That’s why investors who avoid constant tinkering and let their investments ride often outperform. The key isn’t constant activity—it’s letting time and math work in your favor.

Please Note: Markets have weathered every kind of disruption—from inflation spikes to wars, recessions, and global pandemics—and still moved forward. That’s why your long-term goals deserve a strategy that looks well beyond short-term headlines and temporary noise.

The Cost of Trying to Time the Market

Trying to time the market is always tempting. (If you could just sell right before the drop. If you could just buy right before the rebound.) Just remember, this is a fantasy. In reality, most who try to time the market end up chasing moves after they’ve already happened, and the cost can be steep.

You often miss the bounce back when you exit the market in fear. The best days—those surprising, high-return recoveries—can show up right after the worst ones. They can also be clustered together, making it nearly impossible to skip the bad without missing the good.

For example, between 2004 and 2023, seven of the 10 best days came right on the heels of the worst ones. Had you stayed put, the S&P 500 delivered an average return of 9.8% per year. But miss the 10 best days, and that drops to 5.6%. Miss 20? You’re looking at just 2.3%. And if you happened to miss the 30 best days altogether, your return would have been nearly flat at just 0.1% per year.9

This is why so many long-term strategies beat the market timers. When you stay invested, your performance reflects the full arc of the market. When you jump in and out, you make investment decisions based on emotion, not evidence—and often at the worst moments.

Tune Out the Noise—Focus on What Matters

It’s harder than ever to hold your attention steady. Every screen screams for it—news alerts, political outrage, and social media sentiment. But successful investors don’t chase headlines. They train themselves to tell the difference between what’s loud and what’s lasting. Here’s how that mindset plays out in practice:

Politics create drama, not direction: Elections, legislation, and party shifts may rattle markets temporarily, but they rarely alter the long-term trajectory. In fact, the stock market has delivered positive results under every political combination (Democratic presidents with Republican Congresses, Republican presidents with Democratic Congresses, and every mix in between.) Policies may influence certain sectors in the short term, but the broader economy and market returns are shaped by innovation, productivity, demographics, and global trends—none of which reset every four years.

The media isn’t your portfolio manager: Keep in mind that headlines are written to provoke clicks—not to help you make sound financial decisions. The media thrives on crisis language because it captures attention. But “stocks drop 2% on economic data” becomes “Market in Freefall” by the time it hits your feed. This kind of sensationalism can create an emotional whiplash that pulls you away from your plan. Smart investors know the real investment story unfolds slowly—over quarters, years, and decades.

Public sentiment swings—but value builds quietly: Consumer confidence surveys, investor sentiment polls, and market mood indexes often reflect how people feel, not what companies are actually doing. Feelings can shift with headlines, elections, or even celebrity tweets. But companies continue to innovate, make earnings, enter emerging markets, and provide returns to shareholders. Investment value accrues beneath the surface, even when the mood is sour.

Short-term volatility blinds you to long-term compounding: Zoom in, and the market looks erratic—spikes and crashes, red days and green days. But zoom out, and the signal is clearer: over time, the market has steadily moved higher. That upward drift reflects human progress—more people working, more companies growing, and more capital being put to productive use. Obsessing over short-term moves only amplifies anxiety and encourages poor timing.

The best investors are patient listeners—not impulsive actors: As Warren Buffett put it: “If you mix politics with your investment decisions, you’re making a big mistake.” The most successful investors aren’t glued to CNBC or predicting the next Fed move. They’re filtering for what matters: company fundamentals, portfolio allocation, long-term risk tolerance, while letting the rest fade into background noise.

Please Note: There’s no shame in taking a step back. The headlines are built to stir emotion—and they get to all of us sometimes. That’s why working with a financial advisor can be so valuable. Think of them like a coach: they help you stay calm, focused, and committed to your long game, especially when the noise gets loud. You don’t have to tune out the noise alone. Let someone whose job is to monitor the markets help you keep perspective, so you can focus on what really matters—your plan, your progress, and your peace of mind.

FAQs: Long-Term Investing and Market Volatility

1. Is it normal for my portfolio to drop 10% or more?

Yes— in fact, it’s actually quite common. Studies examining a 20-year period have shown that the S&P 500 dropped by at least 10% in roughly half of those years.10 These drops can be scary, especially if you’re checking your accounts frequently, but they’re just a normal part of the market’s cycle.

A dip of this size doesn’t automatically mean something’s wrong with your portfolio or the broader economy. Investors who stay focused on their plan understand that temporary losses are often just that—temporary. Over time, those brief setbacks tend to be overshadowed by the long-term trend of growth.

2. Has the market ever been down over a 20-year period?

When you look at history, there hasn’t been a single 20-year stretch where the S&P 500 delivered a negative return.11 That includes some of the most challenging economic events in modern history: the Great Depression, World War II, stagflation in the 1970s, the dot-com collapse, and the 2008 financial crisis.

3. When’s the right time to get out of the market?

That’s the trick—there usually isn’t one. It’s tempting to think you can jump out when things feel shaky and then jump back in once the dust settles. But the market doesn’t work that way. Many of the biggest up days happen right after the worst ones.

If you’re on the sidelines when those rebounds hit, your long-term performance can take a serious hit. By staying invested through the uncertainty, you don’t need to predict the exact moment of recovery—you’re already in position to benefit when it happens.

4. What if I invest right before a crash?

Investing right before a market dip is a common fear—and it’s not unfounded. The idea of watching your portfolio shrink soon after putting money in can be unnerving. But history shows that time, not timing, does the heavy lifting. Even after sharp declines, markets have typically rebounded within a few years, rewarding those who stayed invested.

The real risk isn’t buying at the wrong moment—it’s abandoning your plan when things look bleak. Long-term gains come not from dodging every downturn, but from sticking with a strategy built for the long haul. Even poorly timed investments, when held over decades, have often delivered meaningful growth.

Please Note: That said, not all investors are starting from the same place. If you’re in or near retirement, the timing of market drops can matter more. This is called sequence of returns risk—the risk that a major market decline early in your withdrawal years can reduce the long-term sustainability of your portfolio, even if average returns are solid over time. It’s a legitimate concern, and it’s one we help our clients plan around. From cash reserves and withdrawal strategies to asset allocation adjustments, we build portfolios that consider both the upside of staying invested and the real-life need to protect against poor timing during retirement years.

5. Do elections or political changes impact long-term returns?

Politics can stir up plenty of market noise and volatility in a given moment. But when you zoom out, the data again tells a more consistent story. The stock market has delivered strong returns under both Republican and Democratic administrations.

No single party owns positive market performance. Rather than letting election cycles guide your investment strategy, it’s more productive to focus on your long-term goals, your personal timeline, and the fundamentals of diversified investing.

We Can Help You Secure Long-Term Investing Wins

Success in long-term investing isn’t about calling the market’s next move. You should build a plan you can actually stick with. That means recognizing that your behavior, particularly how you respond during tough times, matters more than any prediction or forecast. You don’t need to be perfect. You simply need to be consistent. Discipline creates the space for compounding to do its work—quietly, powerfully, and over time.

But it’s not just discipline that matters; it’s belief that it will work out. Not blind optimism, but confidence grounded in history. A sense that—even with setbacks—the world keeps moving forward. That companies adapt. That people keep building. That progress, while uneven, is real. Holding that belief is what allows you to invest for the long term.

If this long-term approach resonates with you, you don’t have to figure it out on your own. You can work with one of our financial advisors who understands your personal values and retirement goals. We invite you to schedule a complimentary consultation call with our team today.

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Month: September 2025

The Real Benefits of Long-Term Investments: Why Patience Pays Off