Picture this. A first-time cruiser steps aboard a gleaming ship in Miami, bound for the Caribbean. Everything they know about cruising came from glossy brochures and Instagram reels — turquoise water, cloudless skies, a string quartet on the promenade deck. And then, somewhere off the coast of the Bahamas, the ship sails straight into a squall. The deck chairs start sliding. The horizon tilts. The wind picks up. To this passenger, the trip feels ruined. The whole idea feels like a mistake.
The seasoned cruiser in the next cabin barely looks up from her book. She has been through weather before. She knows that a few hours of chop is simply part of being on the ocean. She puts on a motion sickness patch, orders a cup of tea, and waits it out. By dinner, the sky has cleared, and the ship is moving on.
Two people, same ship, same weather — completely different experiences. The difference isn't the storm. It's the expectations each person brought aboard.
Your Expectations Shape Your Experience
The same principle governs how investors react to the stock market. If you have been led to believe that a “good” portfolio is one that only goes up, then every downturn will feel like a failure. You'll second-guess your strategy. You'll want to do something — anything — to stop the pain. And acting on that impulse is almost always the wrong move.
On the other hand, if you walk into the market already knowing that periodic declines are part of how investing works, you are far less likely to panic when they arrive. A drop feels less like a crisis and more like weather you planned for.
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“The difference between panic and patience is almost never the storm. It's the preparation.” |
What the Numbers Actually Show
We live in an era where a 2% one-day decline triggers red banner headlines and breathless commentary on cable news. It can feel, in those moments, as if something unprecedented is happening. But the historical record tells a very different story.
Since the early 1950s, the S&P 500 has experienced a drawdown of 5% or more in roughly 92% of calendar years. In other words, a mid-single-digit pullback happens in nearly every year you will ever be invested. And in more than half of those years — about 55% — the index experienced a correction of 10% or more.
Now here is the part that matters. Over that same multi-decade period, the S&P 500 has delivered an average annual return of more than 10%. Every one of those gains was earned by investors who stayed on the ship through the weather.
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A Quick Reframe • A 5%+ pullback in any given year: nearly always (about 9 years out of 10). • A 10%+ correction in any given year: more often than not. • Long-term average return anyway: roughly 10% per year. The volatility isn't a bug. It's the price of admission for the returns. |
Why This Matters for Virginia Families Right Now
We are writing this in the middle of a year that has already delivered several bouts of volatility. For clients who are retired or approaching retirement, these moments can be especially unnerving. Your paycheck has stopped. Your portfolio is now the paycheck. And the headlines are shouting.
Here is what we want you to remember. A well-built financial plan is not a bet that the market will rise every day. It is a strategy designed to carry you through the days when it doesn't. At Alperin Law & Wealth, every plan we build assumes that corrections will happen — because they will. That is why we diversify.
That is why we maintain appropriate cash reserves. That is why we talk about time horizon and sequence-of-returns risk. That is why we stress-test the plan against scenarios far worse than anything we expect. And that is why, when a storm rolls in, we can tell you with confidence: the ship was built for this.
The One Move You Should Never Make in a Storm
The single most destructive thing an investor can do during a correction is to sell out of fear and wait for things to “feel safe” before getting back in. By the time markets feel safe, most of the recovery has already happened. Study after study has shown that missing just a handful of the best trading days — days which cluster near the worst days — can cut long-term returns nearly in half. The people who do best are almost always the people who did nothing.
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“By the time the market feels safe again, most of the recovery has already happened.” |
What to Do Instead
- Check your plan before you check the market. If your long-term plan still makes sense, the daily headline doesn't change anything.
- Revisit your time horizon. Money you won't touch for ten years is not the same as money you need next month. Volatility is a short-term problem, not a long-term one.
- Look for opportunity, not escape. Corrections can be a good time to rebalance, harvest tax losses, or put cash to work at lower prices.
- Pick up the phone. Before you make any major change in a volatile period, talk it through. That conversation is part of what you hired us for.
Let's Talk
If you have questions about how this applies to your family's plan, please reach out. At Alperin Law & Wealth, we integrate estate planning, elder law, and wealth management so that your legal documents and your investments are working in the same direction. A short conversation now can prevent big problems later.