Many of you may be feeling anxious about the rising geopolitical tensions and the recent movement in oil prices. Our clients may recall back in 2020, at the height of the Covid-19 crisis, we shared a message encouraging them to zoom out, stay disciplined, and trust the process. At the time, the fear felt overwhelming. Markets were falling rapidly, headlines were relentless, and uncertainty seemed unprecedented. But when we zoom out today, the COVID-19 market pullback appears as little more than a blip on a long-term market chart and barely registers in the broader context of long-term investing. This highlights an important truth about markets, which is that they move forward, regardless of the crisis of the moment.
Each time markets decline, it feels different. The risks appear unique, and the uncertainty feels deeper, but the underlying principles of investing have remained consistent.
The lessons we shared then are just as relevant now.
1. Peaks and troughs are part of the journey
While peaks feel rewarding, troughs are uncomfortable and create anxiety. History shows that despite these short-term fluctuations, the long-term trajectory of markets has always been upward.
2. Recoveries often come faster than expected
Many of you will remember how quickly markets rebounded after COVID-19 and the 2008–2009 Global Financial Crisis. In both cases, markets fell sharply, and the outlook felt severe, yet the recoveries that followed were relatively swift.
Looking at the S&P 500, bear markets (declines of 20% or more) have occurred roughly every 5 to 7 years, albeit irregularly. The average bear market decline has been in the range of 30%–35%, with most recoveries occurring within 1–3 years.
3. Strong returns often follow periods of decline
History* shows that in the years following a 20% or more crash, the local stock market generally delivered returns of almost 18% per year over the following 5 years.
While no one can predict the future with certainty, markets have consistently rewarded patience. The discomfort of a downturn has often been the entry point to future growth.
4. Controlling emotions
Poor investor decisions can cause irreparable damage. Selling during periods of decline locks in losses and often results in missing the recovery, as market timing is not possible.
The most successful investors are not those who avoid volatility, but those who endure it. Staying invested, following a well-constructed plan, and resisting emotional decision-making remain the cornerstones of long-term success.
5. “This time it’s different” is rarely true
Time and again, markets have proven resilient. Whether it was wars, financial crises, pandemics, or political instability, markets have recovered and gone on to reach new highs.
What should you do in times like these?
The answer remains unchanged:
- Stay patient, disciplined and invested. Simply ignore the noise.
- It will not be useful to look at your investment values now.
- Trust the process – your investment strategy has been designed to achieve your long-term goals. Crises will come and go, and headlines will shift. Stick to your plan no matter how uncomfortable it is.
As advisers, our role is to guide you through these periods and help you guard against the “this time it’s different” narrative that can derail your long-term goals.
I will close with the same quote by Bill Bachrach that I shared during the COVID-19 period.
“no external event is the determining factor of financial success or failure. The determining factor was, is today and will always be, the choices made before, during and after these events.”
*(JSE ALSI period from 2001- 2025)