When a Plan Works

In March, markets gave us a real test. The S&P 500 dropped roughly 10% over a few weeks, headlines turned sharply negative, and plenty of investors were asking whether something had fundamentally changed. This video examines what happened and what it actually taught us.

In April, markets fully recovered from that decline. The S&P 500 is trading near where it started the year. If you had turned off the news on March 1 and turned it back on , you’d see a market that looks almost unchanged.

But of course, investors didn’t get to turn off the news. They lived through every day of it. And that’s really the point of this conversation.

Staying the Course

When we design portfolios, we build them with the assumption that moments like March would happen. Not because we can predict them. We can’t. But because we know, from nearly a century of market data, that a decline of 10% or more happens roughly every other year on average. It is not a crisis. It is a feature of how equity markets compensate long-term investors for taking risk.

What Went Well in March

First, diversification did its job. Portfolios with meaningful exposure to bonds, international equities, and other asset classes declined less than headline indexes. Diversification is not glamorous, but in weeks like those, you are glad you have it.

Second, staying invested mattered more than timing the bottom. The strongest recovery days tend to cluster very close to the worst decline days. Missing just a handful of them can meaningfully change long-term outcomes. Investors who sold in late March and waited for the all-clear signal are now trying to decide when to get back in, usually at higher prices.

Lastly, the plan worked because it was built before the volatility, not during it. Decisions made in calm markets are almost always better than decisions made in turbulent ones.

Conclusion

We are not out of the woods and may see more volatility this year. Earnings, policy, and geopolitics all carry real uncertainty. However, the framework we use to build portfolios is designed to hold up through exactly these kinds of moments.

The goal was never to avoid drawdowns. The goal was to make sure investors can live through them without changing course. In March, that’s what the plan did.

If you have any questions about anything covered in this video, please don’t hesitate to reach out to your advisor.

Sources & Disclosures