Importance of Staying Invested During Market Corrections
Disclaimer: Good Day, Readers. WealthBuildingPowers blog is a financial literacy/competency blog and does not provide specific investment recommendations.
Two years from today, based on historical performance (this is an open book, Google, or AI question), do you think the market will be higher than it is today? It most likely will be higher, which helps me fight the urge to panic sell.
Many sold their stock/funds during this stock market’s April 2025 correction due to a tariff war. I understand the temptation, as I did precisely that twice—once in 1987 and a second time, I believe, in 1997. The problem was that I had no idea when to return to the market, and I missed out on the tremendous positive correction.
Missing Out on The Upside
On April 4- 8, 2025, the S&P 500 lost ~12% only to bounce back on April 9 by 10%. Many people panicked and sold in those tough days, and those sellers di not gain when the market rebounded.
The cost of missing the market’s best days
According to JPMorgan’s research, “investors who stay the course fare much better over time.
“Take a $10,000 investment in the S&P 500 index. If an investor put that sum in on January 3, 2005, and left that money untouched until December 31, 2024, they would have amassed $71,750 for a 10.4% annualized return.
Yet if that same investor had sold their holdings and missed the market’s best days, they would have accumulated much less. For the investor who invested $10,000 in the S&P 500 in 2005, missing the 10 best market days would have reduced their portfolio value from $71,750 to $32,871, for a 6.1% return versus the hold strategy return of 10.4% annual returns, had they stayed invested through the end of 2024.
The more investors moved in and out of the market, the more potential upside they would have lost. If they missed the market’s best 60 days between 2005 and 2025, their return would be -3.7%, and their balance would be just $4,712 — a sum well below the $10,000 invested initially.”
How investors can adjust their perspective
In 150 years of stock market history, there have been wars, natural disasters, acts of terror, financial crises, a global pandemic, and more. Yet the market has always eventually recovered and climbed to new all-time highs.
“If that becomes what you’re looking at, kind of the light at the end of the tunnel, then it becomes a lot easier to stomach the day-in, day-out volatility,” Manley said.
Today, the markets have not fallen as far as the COVID market drop. But the question of the two-year outlook—and the resulting response to generally stay put—is still relevant.
It’s also important to consider the purpose of the money. I am honored and thrilled to be paying for my wonderful daughter’s wedding in March 2026, so I need a little bit of cash in about 11 months. Based on my current diversification and assets, I do not need to sell to cover the wedding cost. Look at your plans and decide if you need to liquidate some of your money soon.
A better strategy is to think about your major expected expenses for the next five years and, when the market corrects, decide how much and when you should liquidate. I have an expensive tax bill due by April 15, 2025. Fortunately, I generate and maintain enough cash to cover those expenses.
Conclusion
Decide your cash needs for at least the next 12 months to avoid selling in a market downturn.
Build your financial literacy and knowledge. Seek professional advice as needed.
The paths to financial freedom are UNLIMITED. CHOOSE YOUR OWN!
LET’S MAKE SOME MONEY – CRYPTOCURRENCY IS ACCEPTED! GOLD – EVEN BETTER!!
WHAT SUBJECTS DO YOU WANT TO READ NEXT? WHAT QUESTIONS CAN I ANSWER? UNTIL NEXT TIME!
YOUR GREATNESS IS NOT WHAT YOU HAVE; IT’S WHAT YOU GIVE! – SOME CHARITIES I SUPPORT
St Jude Hospital: https://www.stjude.org/
Wounded Warrior Project: https://www.woundedwarriorproject.org
Folds of Honor: https://foldsofhonor.org
Wilson’s No-Kill Animal Shelter: https://wcnkas.org
TRUST ME – YOU WILL LIKE THE BLOGS BELOW!
Investing in Yourself!
Unlocking Wealth – Who is Your E.F. Hutton?
Catalysts of Wealth – Family and Education
To Join Wealth Building Powers BLOG:
PLEASE SIGN UP TO FOLLOW ME BY PROVIDING YOUR E-MAIL IN THE WORDPRESS BLOG PAGE SUBSCRIBE BOX!
Thank you to my followers and readers for your likes and comments. I welcome all comments, recommendations, and feedback, which will be utilized to improve this blog.
ABOUT ME
I am a proud nerd (as my beautiful wife and daughter have told me), an investment and finance blogger with an NC. State, Chemical Engineering, Rutgers University, MBA, and Harvard University, Advanced Management education.
I left a corporate career to make a difference as a speaker and writer. I was blessed to be coached and mentored by strong women and men in my family and professional life. It is my time to serve and give back.
DISCLAIMER
I started my first business at ~13 years of age (a small but brilliantly created plant nursery). I am a successful investor in stocks, options, and real estate, and am happy to share my finance and investment lessons. I am NOT a licensed financial advisor. Please do not construe my suggestions on this blog as recommendations for your situation. As an investor, you must establish your risk/loss tolerance. Investment in any asset involves risk, including complete loss.
Please seek individual financial advice from your licensed CPA or fiduciary financial advisors.
I write this weekly blog to make an impact by reaching an audience and demonstrating the need for financial literacy. I will help you achieve that goal.
