Perspective matters more than headlines
As I sit down to write this on a peaceful Sunday evening, I am aware that you may not come across these words for several weeks. This is not a hurried market prediction, a spur-of-the-moment reaction, or a sensational headline meant to grab your attention. Instead, my intention is to offer you something rare in today’s fast-paced world: perspective.
Perspective is a valuable commodity in the current climate of constant urgency in business news and market analysis. The relentless focus on economic indicators, breaking news, market fluctuations, trade tensions, political developments, and speculations can be overwhelming. The pressure to react swiftly to every piece of information is strong, fueled by the notion that inaction is a form of negligence in these turbulent times.
But here’s the truth: good investing requires a long-term mindset, a steady resolve, and a resistance to the notion that daily market fluctuations should dictate your actions. A well-crafted financial plan is not designed to shield you from volatility but to withstand it, even if it causes some discomfort along the way. While the current landscape may seem uncertain and daunting, history teaches us that things tend to improve over time.
Consider the events of Thursday, April 17, for instance. The S&P 500 closed around 5,280, marking a 14% decline from its recent peak. This decline may have felt alarming at the time, especially with the media portraying the situation as dire and irreversible. But when we zoom out and look at the bigger picture, we see that such market drops are not uncommon. In fact, over the past 45 years, the S&P 500 has experienced an average intra-year decline of 14.1%. This recent downturn is just a part of the normal ebb and flow of the market, something that long-term investors are well acquainted with.
Our challenge as investors is not to predict the future with certainty but to adapt to whatever comes our way. Market fluctuations are inevitable, but so is recovery. Over the years, we have witnessed wars, crises, and uncertainties, yet the market has consistently bounced back. This resilience is a testament to the enduring nature of markets, driven by innovation, growth, and the resilience of businesses.
It can be difficult to maintain a balanced perspective in a world where headlines dominate the narrative. Financial commentary tends to focus on the immediate, often overlooking the broader context that is essential for making informed decisions about our long-term financial goals.
Looking back at the financial crisis of March 9, 2009, when the S&P 500 hit a low of 675, down nearly 57% from its peak, we are reminded of the importance of perspective. The Great Recession felt catastrophic at the time, but in the following years, the market rebounded significantly, fueled by technological advancements and human ingenuity that were unimaginable during the downturn. This is the kind of context that headlines often fail to provide.
When faced with market downturns, the most valuable asset we can lose is not money but perspective. Without a clear perspective, we are prone to making hasty decisions that could harm our long-term financial well-being. While the media may urge us to focus on short-term gains and losses, true wealth-building requires a long-term view, looking ahead 20 to 30 years into the future.
Ultimately, we have a choice in where we place our attention: on sensational headlines or on the lessons of history. While headlines may grab our attention with their urgency, history offers a more profound truth: markets will recover, innovation will continue, and patience will be rewarded in the long run.
Steve Booren is the founder of Prosperion Financial Advisors in Greenwood Village. He is the author of “Blind Spots: The Mental Mistakes Investors Make” and “Intelligent Investing: Your Guide to a Growing Retirement Income” He was named by Forbes as a 2024 Best-in-State Wealth Advisor, and a Barron’s 2024 Top Advisor by State.
