Market volatility is the price of admission for long-term investing

Market volatility is a normal and unavoidable part of investing. Throughout history, U.S. stocks have experienced wars, recessions, inflation spikes, and financial crises, yet the long-term trend has remained upward. Understanding why volatility occurs and how investors can manage through it is essential for long-term investment success.

Every time markets get choppy, it feels like something unprecedented is happening. Clients start asking questions. Headlines get louder. And investors begin wondering if this time is different.

But when you step back and look at history, the reality is much less dramatic. Volatility is not new. It’s normal. And it’s the price investors pay to earn long-term returns.

The long-term trend still points up

The first exhibit in the attached presentation shows the growth of $10,000 invested in U.S. stocks since 1950.

Source: YCharts. Data as of December 31, 2025.
Listed military campaigns are not all inclusive but representative of military actions gathering headlines for U.S. investors.

During that period, investors lived through:

• The Korean War
• Vietnam and other conflicts in Southeast Asia
• The Cold War
• The Gulf War
• The wars in Afghanistan and Iraq
• Numerous geopolitical crises and military conflicts

They also experienced:

• Multiple recessions
• Oil shocks
• Inflation spikes
• Political turmoil
• A global pandemic

And yet, despite all of that noise, the long-term trajectory of U.S. equities has been remarkably consistent: upward.

The exhibit also highlights something many investors forget. Markets have risen under every type of political leadership. Republican administrations, Democratic administrations, divided governments — it hasn’t mattered over the long run. Investors often try to position portfolios around political or geopolitical events. History suggests that approach is unlikely to be a winning strategy. Markets don’t pick sides.

Pullbacks are a feature, not a bug

The second exhibit tells an equally important story.

Source: YCharts. Data as of February 28, 2026.

It shows every peak-to-trough pullback in the S&P 500^® since 1950. Two important observations jump out:

First, pullbacks happen regularly. They are not rare events. They are part of the normal functioning of markets. If you invest in equities long enough, you will experience drawdowns.

Second, the largest market drawdowns are not usually tied to military conflicts. While wars dominate headlines, the biggest market declines tend to come from other sources:

• Economic crises
• Financial system stress
• Asset bubbles unwinding
• Monetary policy shifts

In other words, the things investors tend to worry about most are not always the things that ultimately move markets the most. You cannot achieve attractive long-term returns without experiencing volatility along the way.

The long-term return premium from equities exists because investors must endure periods of uncertainty and drawdowns. Trying to avoid all volatility usually leads to a different problem – missing the recovery. And historically, some of the strongest market gains occur shortly after the most difficult periods.

Managing the ride matters

While drawdowns are inevitable, investor experience can vary significantly depending on how a portfolio is constructed.

Investing with risk management in mind -through diversification, dynamic asset allocation, and disciplined rebalancing — can help:

• Reduce the depth of drawdowns
• Shorten recovery periods
• Improve investor behavior during stressful markets

A smoother ride often helps investors stick with the plan, which ultimately leads to better long-term outcomes.

Staying the course

The lesson from market history is not that volatility disappears. It’s that markets have consistently rewarded investors who stayed invested through it.

Wars, recessions, political changes, and crises will continue to occur. They always have. For advisors and investors alike, the challenge isn’t predicting the next headline. It’s maintaining a disciplined plan when the headlines arrive.

Key takeaways

• Market volatility is a normal part of investing and has occurred throughout modern financial history.
• S. stocks have delivered strong long-term returns despite wars, recessions, inflation, and geopolitical crises.
• Stock market pullbacks happen regularly and are not unusual events.
• Historically, the largest drawdowns are typically caused by economic or financial system stress rather than geopolitical conflicts.
• Risk management, diversification, and disciplined rebalancing can help investors navigate volatility.
• Staying invested during difficult markets has historically been critical for long-term returns.