Moneywise
6 min read
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Since 1950, the US has weathered 11 recessions, proving time and again that downturns aren’t a question of if, but when.
After a strong performance from the S&P 500 in 2024 — which experts hailed as a “very good year” — storm clouds are forming. Trump's aggressive tariff policies have rattled markets with the S&P 500 entering correction territory in April 2025.
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Times like these may have long-term investors wondering what they should do to protect their portfolios. The answer? Do nothing and stay the course.
“Generally, the advice boils down to staying invested. But I firmly believe that just saying ‘stay invested’ doesn’t work on days when stocks are in free-fall and the world feels terrible,” Callie Cox, chief market strategist for Ritholtz Wealth Management, said to The Washington Post.
“We’re not robots, we’re humans with emotions, and we need to honor that in times like these.”
Watching the portfolio you’ve built for retirement fluctuate can be unsettling, especially when market downturns threaten the very assets you plan to rely on.
However, selling and moving your money to the sidelines is typically not the best course of action.
“Seventy-eight percent of the stock market’s best days have occurred during a bear market or during the first two months of a bull market,” according to Hartford Funds, an asset management firm that includes Schroders and Wellington Management. “If you missed the market’s 10 best days over the past 30 years, your returns would have been cut in half. And missing the best 30 days would have reduced your returns by an astonishing 83%.”
One way for investors to diversify a portfolio is by buying into international assets, with well-known asset management firm Vanguard suggesting at least 20% in international stocks and bonds as a benchmark.
However, diversification isn’t just about protecting your portfolio — it’s about building resilience. That’s why holding investments beyond the S&P 500 can act as a cushion when the economy hits a rough patch.
