Navigating Market Volatility
Downturns Are Inevitable, but Missing the Rebound Doesn’t Have to Be
This week’s market turmoil has likely caused a great deal of stress. Seeing your portfolio dip—especially after strong gains in 2023 and early 2024—can lead to difficult questions and understandable concern.
But here’s what history shows: staying invested during periods like this is critical to long-term success.
Over the past few years, we’ve experienced:
- A 20% correction in 2018
- A 35% drawdown during the COVID crash
- A 27% correction in 2022
That’s three significant market events in a short span, and yet, investors who remained disciplined and fully invested still saw strong cumulative returns. Why? Because markets recover. And when they do, the best days often come quickly and unexpectedly.
Attempting to exit and reenter the market can be detrimental to long-term performance. In fact, missing just the 10 best days over a 20-year period would have cut an investor’s return by more than half. And many of those “best days” occurred during downturns—not after them.
Over a typical investor’s lifetime, it’s common to experience:
- 20 market corrections (10% or more)
- 6 full bear markets (20% or more)
These aren’t anomalies. They’re part of investing, and trying to avoid them by timing the market often leads to worse outcomes than riding them out.
At Hanover, we don’t chase headlines or try to predict short-term swings. We focus on long-term fundamentals, tax efficiency, and risk-adjusted strategy. Your investment portfolio is built to weather volatility—because volatility is part of the journey.
Staying consistently invested over the past quarter century would have meant maintaining discipline though the dotcom bubble, 9/11, the Great Financial Crisis, the Covid selloff, and several other isolated corrections. The markets will regularly provide a reason to eye the exits, but history has shown that staying the course leads to the best outcomes.
If you’re feeling uncertain, that’s natural. This isn’t a moment to panic, however. It’s a moment to focus on what you can control, assess your risk tolerance, and keep a long time horizon in mind instead of fixating on the volatile swings the market will take.
As always, Hanover is here to answer questions. If you have any concerns you’d like to talk through, reach out to our main office or your client representative.