By Kevin Wood, CFP™ - September 2025
When markets fall sharply, it is human nature to feel that the safest course of action is to step aside, move into cash, and wait until the storm clears. Yet history has shown, time and again, that this instinct often leads investors directly towards the risk they most hope to avoid: missing the recovery.
Market declines are not rare events. On average, equities experience drawdowns of roughly a third every five years. While unsettling, these downturns have always been temporary. What follows them, more often than not, are swift and powerful rebounds.
A striking truth emerges when we look at past market bottoms. In the seven major panics so far this century, the S&P 500 rose an average of 16% within just 28 days of hitting its low. That means investors who fled to cash during the downturn often found themselves paralysed—unsure when to re-enter—and ultimately missed some of the strongest gains.
Consider March 2009, at the depths of the Global Financial Crisis. Within four weeks of the market bottom, equities had surged by nearly 24%. Similarly, in March 2020, as the world reeled from the pandemic, the market leapt 26% in the first month of recovery. Those who sat on the sidelines waiting for “certainty” were left watching the train leave the station without them.
The lesson is simple but profound: the greatest danger during a market panic is not that shares fall further, but that they rebound without you. The cost of missing those crucial early days can compound into a lifetime of regret.
This is why patience and discipline are at the heart of long-term investing. By staying the course—even through turbulence—investors ensure they participate fully in the recovery that inevitably follows. The role of a trusted wealth manager is not only to help clients grow their wealth, but also to help them avoid the decisions that could undermine it.
The bottom line? Markets will stumble, sometimes dramatically. But history suggests they also recover—quickly, and often when least expected. Missing just a few weeks of that rebound could set back years of careful planning. The key is not to predict when the tide will turn, but to remain invested so that when it does, you are on board.