“When things go wrong, don’t go with them.” —Elvis Presley
If you checked your portfolio Monday afternoon and felt a little sick to your stomach, you weren’t alone. The S&P 500 dropped more than 2%, and it felt like one of those weeks was shaping up.
But then Tuesday happened.
The market turned on a dime, ripping higher by over 2%. By Wednesday morning? A 2%+ gap up before the market even opened. All in, this week started with a sequence that’s never happened before in SPY’s history: a 2%+ drop on Monday, a 2%+ gain on Tuesday, and a 2%+ gap higher on Wednesday.
This is real-world volatility.
Market Volatility ≠ Crisis
The type of market action we saw this week isn’t just rare—it’s historically significant.
Since 1953, a sequence like this week’s (2%+ drop followed by a 2%+ gain while under the 200-day moving average) has only happened 22 other times. The chart from Bespoke Investment Group below shows the S&P 500 since 1953 and a red dot for each occurrence.
And those reversals? They’ve often marked the early stages of strong long-term recoveries. One year later, markets were up over 20% on average—with a 91% success rate.1
The market can always move lower—that’s a possibility. But I like to focus on probabilities, not possibilities.
The probability of long-term gains in scenarios like these is heavily in favor of investors who hold steady. That 91% success rate isn’t trivia—it’s a signal.
It’s not unlike how a casino operates. The house doesn’t need to win every hand—it just needs a consistent edge. Staying invested during volatility the same kind of advantage.
In chaotic weeks like this one, it’s our job to separate the signal from the noise.
Great Leaders Manage Through Chaos
Good leaders use data to guide their decisions. For us, the data is critically important when deciding whether to reinvest after selling stocks vs. holding cash.
We may sell a security, but that doesn’t automatically mean we buy something else right away. Sometimes, the data says: “Not yet.” That’s not guesswork—it’s informed discipline.
Think of it like a cash flow crunch you see coming months out. You don’t double down on ego and keep spending like nothing’s wrong. You pivot early — cut costs, renegotiate terms, delay expansion — so you can weather it and come out stronger on the other side.
Holding cash during a market downturn works the same way. It’s not about fear or ego—it’s about managing risk until the environment improves.
That said, our investment team doesn’t pretend the data is a crystal ball. It won’t tell us the exact moment to start collecting cash, nor will it give us a blinking green light for the perfect time to buy back in. Precision like that doesn’t exist. But accuracy does. And over a 3-, 5-, or 10-year time horizon, it’s more than good enough.
Following a process that’s accurate is reliable enough to get the big calls mostly right, even if the exact timing isn’t perfect. It keeps us on the right side of the long-term math.
Removing Emotion from Decisions
And just as important: removing emotion from decisions. Because emotion drives poor decisions – in any high-stakes situation. Eliminating that variable gives you a fighting chance to succeed.
While holding cash during market volatility can be misconstrued as emotional, it isn’t as long as it’s part of a strategic, disciplined portfolio management process and not market timing or panic-driven liquidation. Liquidating out of fear is emotional.
Holding cash, for us, is a positioning move that gives us the option to act with intention when the environment shifts. Optionality is the asset here.2
Did You Stay Invested This Week?
If you stayed invested this week, good on you. That’s hard. If you were tempted to throw in the towel, remember: market swings are part of the deal. Use them to your advantage—but don’t let them hijack your decisions.
This is exactly when disciplined planning earns its keep. The hard part is sticking to it—or being honest when it’s time to fine-tune it.
Maybe your risk tolerance has shifted. Maybe you’re rethinking how cash fits into the bigger picture. Those are good questions—and worth wrestling with.
Because what matters isn’t what happened this week—it’s what happens next. And how prepared you are for it.
A plan refined with clarity stands the test of volatility.
Related: Navigating Tariff Turbulence: Lessons in Market Discipline