Why staying invested wins

Market uncertainty is part of the investing journey. Whether it’s political headlines, trade tensions, or economic shifts, periods of volatility can tempt even seasoned investors to act. History shows that staying the course often delivers better outcomes than reacting in the moment.

Why Reacting Often Backfires

When markets fall sharply, it feels like the logical thing to do is take cover, but reacting emotionally can lead to costly mistakes.

• 2008 financial crisis: Many who sold during the crash missed out on the powerful recovery that followed. The S&P 500 nearly halved in value, only to triple over the next decade.
• Brexit (2016): The FTSE 100 dropped 9% but regained its losses within weeks. Investors who rushed to sell locked in unnecessary losses.
• COVID-19 crash (2020): Global markets fell around 30% in a month, then rebounded quickly. Those who exited missed one of the fastest recoveries in market history.

The pattern is clear: reacting to short-term events often means missing long-term gains.

Missing the Best Days Can Derail Your Strategy

Returns in the stock market tend to come in short, unpredictable bursts. Missing just a few of the best days can have a dramatic impact on your long-term results.

Let’s say you invested in the US stock market between March 2005 and March 2025:

• Staying fully invested delivered a 10.2% annual return
• If you missed the 10 best days, that return fell to 6.0%
• Missing the 20 best days dropped it further to 3.3%
• And if you missed the 30 best days, the return was just 1.2%

What’s more, 7 of the 10 best days in the market occurred within two weeks of the 10 worst days. This isn’t a coincidence, fear and opportunity are two sides of the same coin.

That’s why the idea of “I’ll sell now and buy back when things are calmer” is so dangerous. It assumes you can sidestep the storm and time the recovery. You’re far more likely to lock in losses, miss the rebound, and end up worse off than if you’d simply held on.

What to Do Instead

If you feel the urge to act, focus on steps that support long-term stability:

• Check in on your risk tolerance. If market swings are making you nervous, your portfolio may be too aggressive. An adviser can help you adjust it so you’re more comfortable sticking with it.
• Strengthen your emergency fund. Keeping 3 to 6 months’ expenses in cash means you won’t need to dip into investments when markets are down.
• Consider investing more, if you can. Downturns can be an opportunity in disguise. If you have spare cash and your emergency fund is in place, putting extra money to work while prices are lower could benefit you over time. After all, would you rather buy investments at full price or at a discount?
• Step back from the headlines. Constant updates can lead to emotional decisions. Reducing your news intake can help you stay focused on your plan, not the panic.

Sometimes, the hardest thing to do is nothing at all. But when it comes to investing, patience is often your greatest advantage.

Get in touch with me at andrew.e.gray@sjpp.co.uk to arrange your session or request a complimentary copy of the template.

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Gilson Gray Financial Management is an Appointed Representative of and represents only St. James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the group’s wealth management products and services.

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