Yes, the stock market is now in free fall.
In just over a month, the S&P 500 has plunged nearly 9%, the Nasdaq has dropped over 12%, and the Dow Jones has shed nearly 3,000 points.
This past Monday’s session alone saw the S&P 500 drop 2.7%, bringing its losses for the past two weeks to over 6%.
Market volatility has skyrocketed, with the volatility index (VIX) swinging more than 1% in either direction on seven of the past eight trading days.
Wall Street is rattled, and so are everyday investors watching their portfolios shrink.
The reason is of course, Donald Trump’s aggressive trade policies.
His recent announcements have caused widespread economic uncertainty, and a growing sense that the administration is willing to tolerate near-term economic pain to reshape America’s financial landscape.
Trump’s refusal to rule out a recession has only deepened market fears.
The sudden U-turn on tariffs by first imposing them, then freezing them, then threatening more, has left businesses unable to plan.
At the same time, large-scale government layoffs and fiscal tightening have further shaken confidence.
Investors are understandably anxious. But in times of uncertainty, history and data provide clarity.
While no one can predict exactly how the next few months will unfold, there are fundamental truths about investing that remain as relevant today as they were in every past market downturn.
Here’s what investors need to remember right now.
Stock market sell-offs are part of the process
It never feels good to watch the market drop, but corrections and bear markets are part of investing.
Historically, the S&P 500 experiences an average annual max drawdown of 14%, meaning the kind of declines we’re seeing now are well within the norm.
Even in strong bull markets, temporary pullbacks of 5% to 10% happen regularly.
In fact, since 1928, 26% of all years have ended with negative returns, and yet the market has always recovered.
Data from JPMorgan’s Guide to the Markets shows that since 1980, the S&P 500 has ended positive in 32 of the last 42 years despite suffering large intra-year losses.
The 2008 financial crisis wiped out over 50% of the market’s value, but those who stayed invested saw the S&P 500 rally more than 400% over the next decade.
Even during the 2020 pandemic crash, where the market fell 34% in weeks, the recovery was swift and overwhelming.
The lesson is clear: crashes feel catastrophic in the moment, but history suggests that they are temporary setbacks in a long-term uptrend.
Short-term volatility is just noise—what matters is the long-term trajectory
It’s tempting to interpret every drop as a sign of something deeper, but markets rarely move in a straight line.
Even during strong bull runs, the stock market sees numerous pullbacks.
The S&P 500 has historically delivered average annual returns of 8-10%, but those returns do not come in a smooth, linear fashion.
Many investors forget that even the best years for stocks often include significant drawdowns.
The average investor today has access to more financial news than ever before, but more information does not always lead to better decisions.
The daily focus on red charts and dramatic headlines can distort perspective.
On any given day, the stock market has a 47% chance of being down.
But over long periods, it has consistently gone up. Investors who react to every dip risk losing way more than those who maintain a long-term perspective.
Do not always trust the headlines
Fear sells, and nowhere is this more evident than in financial media.
The stock market is up more than 80% of the time, but negative news dominates the headlines.
This is because daily market moves are often arbitrary, yet journalists are forced to attach narratives to them.
Headlines like “Stocks Plunge on Recession Fears” or “Markets Tank as Investors Flee” reinforce panic, even when the decline is within historical norms.
Even if the broader economy remains resilient, media coverage will highlight every negative data point.
Economic uncertainty, trade wars, and shifting policies create an easy backdrop for alarmist reporting.
Investors need to recognize that most headlines are designed to generate engagement, not provide objective, long-term investment advice.
Taking a step back from the noise and focusing on actual financial data is often the best course of action.
Do not try to time the market
It may seem like a good idea to sell now and buy back when things calm down, but history shows that trying to time the market is one of the worst mistakes an investor can make.
The biggest market gains often come immediately after the worst crashes. Missing just a handful of the best days in the market can devastate long-term returns.
Consider this: Over the past 20 years, if an investor stayed fully invested in the S&P 500, they would have earned an annualized return of roughly 7%.
But missing just the 10 best days in the market would have cut that return nearly in half.
Many of these best days occurred when sentiment was still overwhelmingly negative, which is right after major crashes.
Selling during market turmoil means locking in losses and risking missing out on the recovery.
Zoom out
It is difficult to see beyond the chaos when markets are in free fall.
But every major crash in history has eventually given way to a recovery.
The Great Depression, Black Monday, the dot-com bubble, the financial crisis, and the pandemic crash all seemed insurmountable at the time, yet long-term investors who held their positions ended up ahead.
Bear markets are much shorter than bull markets.
The average bear market lasts 289 days, while the average bull market runs for 991 days.
Historically, the stock market has taken just 18 months to fully recover from a bear market’s bottom.
While no one can predict the exact timing of the next recovery, the data suggests that those who remain patient are far more likely to benefit than those who panic and sell.
The markets are in turmoil, and investors are nervous. But history teaches us that market crashes, while painful, are not permanent.
Those who stay disciplined, avoid emotional decisions, and focus on long-term growth tend to be rewarded.
Stock market investing has always been a game of patience.
This moment is no different.
The best course of action is to simply ignore the noise, stick to your plan, and remember that every crisis eventually gives way to opportunity.
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