Market Swings Are Temporary—Your Goals Are Not

In times like these, when geopolitical headlines create uncertainty, it's helpful to revisit the historical perspective that has long guided disciplined investors. Markets have always faced challenges—ranging from geopolitical conflicts and economic downturns to natural disasters, political upheaval, and health crises. These events often trigger short-term volatility and shake investor confidence. However, historical data shows that markets have consistently rebounded from crises and delivered growth over longer time horizons. This pattern underscores the importance of maintaining a long-term perspective even when the near-term outlook feels uncertain.

Consider this: the likelihood of positive returns in the stock market increases significantly with time. While short-term performance can be unpredictable, the probability of gains may improve over longer holding periods. Over any one-year period, the market may be up or down, but over rolling 15 year periods since 1950, each such period has ended positive. While past performance is no guarantee of future results, the odds have historically favored long-term investors who are able to ride through the ups and downs and stay invested. A strategic time horizon is a key advantage long-term investors have over short-term traders and asset managers benchmarked every quarter.

This long-term growth in markets has been driven by the fundamental strength of the economy, innovation, and companies’ ability to adapt and thrive over time, which is also a trend that the team at LPL Research believes has a good probability to continue. A simple investment of $10,000 in the S&P 500, left untouched for 30 years, has historically grown many times over, though past performance does not guarantee future results.

After examining the gains that the stock market accumulated over those 30-years, an uneducated observer could be forgiven for assuming that those years must have provided smooth sailing with few disruptive events. Far from it! If we add an overlay of geopolitical events from the past 30 years, it’s clear that stocks rose despite multiple terrorist attacks and multiple wars. This time frame also includes multiple financial crises, numerous contentious elections, Brexit and even the COVID-19 global pandemic. As with other time frames over the past century, despite countless disruptions and bouts of volatility that they have caused, the stock market has demonstrated remarkable resilience. Strategic long-term investors who stayed the course through these turbulent times may have been rewarded with compelling long-term returns.

While the future is never guaranteed, history shows that patient, disciplined, and diversified investors who stay focused on long-term goals are often better equipped to weather market volatility. Though uncertainty can be unsettling, markets have historically rebounded from crises, with time proving to be a powerful ally for those who stay the course.

If you have specific questions or would like to discuss your own investment strategy or financial planning needs, we welcome you to call us at 302.234.5655 or email us at contactus@covenantwealthstrategies.com to set up time to discuss further.

Disclosures:

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Asset Class Disclosures –

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Bonds are subject to market and interest rate risk if sold prior to maturity.

Municipal bonds are subject and market and interest rate risk and potentially capital gains tax if sold prior to maturity. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply.

Preferred stock dividends are paid at the discretion of the issuing company. Preferred stocks are subject to interest rate and credit risk. They may be subject to a call features.

Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Mortgage backed securities are subject to credit, default, prepayment, extension, market and interest rate risk.

High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor's holdings.

This research material has been prepared by LPL Financial LLC.

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