Almost one year ago to the day of the market high in February 2026, the market began a decline and volatility prompted by “Liberation Day.” The Wall Street Journal reported on April 2, 2026, that a year ago “stocks came within a whisker of a new bear market, Treasury yields spiked and the VIX “fear gauge” reached a level not seen since the Covid-19 panic”.
One year ago in this newsletter I wrote an article about how we can best handle uncertainty. Focus on these three items:
- What can we control?
- Distract ourselves from negative thoughts.
- Reach out to others.
Undoubtedly, investors who were able to obtain this focus have come out stronger than before. In fact, the stock market rewarded us with another year of strong market returns. It seems this market condition applies again this year.
Fear and uncertainty do not always translate into poor market returns. In fact, the Consumer Sentiment Index shows us that low consumer confidence and fear have historically resulted in greater market performance in the subsequent 12-month period than peak moments of positive consumer sentiment. The following chart shows that of the 10 sentiment peaks since 1971, the average 12 month return of the Standard & Poor’s 500 Index (S&P 500) was 4.8%. Conversely, the subsequent 12 month return of the S&P 500 following 9 sentiment troughs averaged 24.1%.
Do not let emotions drive investment decisions. We work together to put together a solid plan for your financial future. Fear and uncertainty will always be a fact of life. How we react to it is what marks success.
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