Investing Can Be a Roller Coaster: Three Tips for Riding Out the Ups and Downs

Investing, like a roller coaster, has its ups and downs. One minute you’re climbing higher and the next a sudden decline makes your stomach drop. A few reminders can help investors to relax amid the turbulence.

1. Keep Your Eye on the Horizon

When you invest, you can expect that both ups and downs will be part of the ride. Decades of stock market returns demonstrate how often declines can happen. For evidence, look at the largest intrayear declines for the US stock market in every year from 1979 to 2023. Those declines average to -14%. However, 37 of the past 45 calendar years have ended with positive returns for the US stock market (see Exhibit 1). So instead of getting anxious over a near-term drop, keeping an eye on the horizon can help investors keep the queasiness at bay.

Exhibit 1: US Market Intrayear Gains and Declines vs. Calendar Year Returns

1979–2023

2. Stay in Your Seat

When the stock market drops precipitously, or headlines speculate it might, it can be tempting to jump out of the market to try to avoid (further) losses. But just as roller-coaster riders are warned to keep their seat belts fastened and stay seated, investors may be well advised to do the same.

Attempting to time the market to avoid the worst days could cause an investor to miss out on some of the best days (see Exhibit 2). Consider that $1,000 invested in the S&P 500 Index back in 1990 would have grown to $27,221 by the end of 2023 if left untouched. However, if an investor had pulled their money out and missed the single best day over the more than 30-year period, their ending wealth would be reduced by nearly $3,000. Worse, if an investor had missed the five best single days, their ending wealth would be reduced by more than $10,000. Over the course of decades, even a few days can make a big difference.

Exhibit 2: S&P 500 Index Performance Based on Time in the Market

1990–2023

Taking a step back from the current moment may provide investors helpful perspective and put fears at ease. Markets have marched upward through the decades, even amid concerning world events, and rewarded disciplined investors over time (see Exhibit 3). This reminds investors that, despite the extreme headlines and bumps experienced in the short term, you may have a better ride by staying in your seat.

Exhibit 3: Growth of a Dollar—MSCI World Index (Net Dividends)

1970–2023

3. Know Your Thrill Tolerance

The same way theme-park goers can choose rides that align with their thrill tolerance, investors can choose an asset allocation that aligns with their risk tolerance. Financial advisors can play a key role in helping you do just that—by exploring your investment objectives and time horizons, and helping you build a diversified portfolio with the appropriate level of resilience (see Exhibit 4).

Exhibit 4: Stock-Bond Asset Allocation Performance

1985–2023

Investing doesn’t have to be a harrowing, white-knuckle experience. A few simple reminders and the help of an investment professional can give you the confidence to ride out the rough patches.

Tariff Target Markets

Non-US stocks have delivered a positive return thus far in 2025, helping offset the US stock market’s disappointing start to the year. But some of the sources for these positive returns may be surprising to investors.

Potential fallout from tariffs has dominated the news cycle, and yet stocks of the primary targets for tariffs—Canada, Mexico, and China—are up for the year. A short sample for sure, but this echoes outcomes during Trump’s first term in office, when the Chinese stock market outperformed the US despite contentious trade discussions throughout those four years.

The lack of negative impact on tariff-target stock markets doesn’t mean investors have tuned out trade policy discussions. Market prices incorporate the aggregate expectations of investors. It could be that tariff developments thus far were in line with those expectations and therefore already priced in by the market.

Exhibit 5: Index Returns in Local Currency

Year to date as of March 7, 2025

Conclusion:

Whether looking at this from a US, UK or wider international picture the message is the same:

·       Think long term – the evidence is clear

·       Stay invested – don’t panic and sell to cash, missing the market “bounce” whilst turning paper losses into real ones

·       Tune out the (media) and look at the broader picture

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