As of this writing, the stock market has faced notable declines driven by a mix of tariff uncertainties, persistent inflation concerns, concerns about economic growth, and cautious signals from the Federal Reserve. Despite a surprise announcement that reciprocal tariffs will be paused (except on China) for 90 days, where markets rallied for one of their strongest days in history (the S&P 500 and NASDAQ were up 10%) on April 9th, the outlook for stocks remains cloudy at best.
For investors, this whipsawing volatility might feel unsettling—after all, watching account balances dip can test even the steadiest resolve. But is this downturn a risk to be avoided or an opportunity to be seized? For long-term investors, the answer lies in perspective, strategy, and a clear understanding of the current landscape.
Historically, market declines are not anomalies—they’re part of the cycle. According to Bloomberg data, since 1950, the S&P 500 has experienced a correction (a drop of 10% to 15% or more) roughly once every two years. Each time, the market eventually recovered and climbed to new highs. The 2020 pandemic crash saw a 34% plunge in just over a month, yet the market had rebounded sharply by year-end.
Today’s significant declines are not yet at that scale, but they’re fueled by real concerns: tariffs threatening global trade, higher costs squeezing corporate margins, and a Fed hesitant to cut rates. For long-term investors, this turbulence can signal a chance to buy quality assets at discounted prices—provided they’re prepared to weather short-term storms.
The risk, of course, is real. Sectors exposed to international supply chains—like manufacturing or technology—could face prolonged pressure if tariffs escalate. Companies with high debt may struggle as borrowing costs remain elevated. For people nearing retirement or relying on portfolio income, preserving capital might outweigh the allure of bargain hunting. Yet, many still need growth to fund spending throughout their lives. Hence, a rising income requires growth to ensure those assets sustain withdrawals for 20+ years or longer. Preserving capital seems appealing now, but it may not help sustain those portfolio withdrawals throughout one’s lifetime.
History suggests that declines often mark entry points for outsized gains for those with a decade or more on their investment horizon. Take the 2008 financial crisis: An investor who bought into the S&P 500 at its nadir in March 2009 would have tripled their money by 2019, even without perfect timing.
Even if you invested at market highs, you’d still be ahead, as the graphic below illustrates:
The S&P 500 has an average annual return of 6.9% (using 4/10/2025 as the end date for all scenarios) if you invested at its market peak since the mid-1950s. This means investing during good and bad times is prudent and helpful for growing capital.
Alternatively, if you thought it was a poor time to invest during a market crisis, the S&P 500 Index averaging 7% annually from the beginning of the 2007-2008 Financial Crisis through April 10, 2025 ought to give you a sense of valuable perspective. The panicked investor most likely missed earning the 7% return because they sold at the lows and missed some of the strong up days of the eventual recovery. This proves again that not allowing yourself to get spooked out of the market is critically important to achieving good returns.
So, how should you approach this moment? At Bloom Advisors, we emphasize a disciplined strategy over knee-jerk reactions. First, assess your risk tolerance—market dips test emotions as much as wallets. If you’re comfortable with volatility and have additional money, you can invest it all at once. If you are uncomfortable, consider dollar-cost averaging (investing a regular amount) into your portfolio using a monthly or quarterly schedule to reduce the impact of further declines. Additionally, our firm’s regular portfolio reviews incorporating our foundational rebalancing process are invaluable in taking advantage of market volatility. It forces us to buy low and sell high, which helps to smooth out the swings.
In summary, a market downturn isn’t universally good or bad—it can be a risk for some and an opportunity for others. Now more than ever, it’s important to stay focused and avoid making impulsive portfolio changes. This environment underscores the value of diversification, patience, and a disciplined investment strategy.
At Bloom Advisors, we’re here to help you navigate these changes and ensure your portfolio remains aligned with your goals and timeline. If your priorities have shifted, we encourage you to reach out.
