Stay in the Market to Keep Your Portfolio Profitable

One of the biggest mistakes you can make when it comes to your investments is letting fear dictate your decisions. Are you able to stay objective or do you allow fear to grip you when the markets get bumpy?

When people make fear-based investment decisions, they are usually the wrong ones because they are based on feelings rather than sound reason. A hallmark sign of smart investing is following a disciplined approach that doesn’t waver in the face of inevitable market volatility. It means negative (or positive) emotions don’t cause you to make impulsive decisions about your investments. Here’s why you have to stay in the market to see gains in your portfolio.

A Look at Historical Market Performance

If you look at historical market performance, you will observe a couple of things. Market volatility is inevitable, and market corrections are temporary. If you zoom in on any given period in history, you will see the market rarely performs in a straight upward or downward trajectory for an extended period of time.

Market swings can be big and small, but it’s usually swinging to some degree. Any challenging periods in the markets have proven temporary, and the power of the American economy has sustained the market’s move higher over time. 

The Danger of Short-Sighted Investing Decisions

The first instinct of a nervous investor is to sell when the market sustains losses and buy back into the market when the market is moving to new heights. Both of these reactive tendencies can be hazardous to your portfolio over time. Human behavior also tells us the most recent events often have an outsized impact on a person’s views and decision-making. In fact, just looking at the market since 1940 tells us all we need to know. In the last 78 years, the S&P 500 has only fallen seventeen times, even with the most catastrophic of human events. 

Your Time in the Market Counts, Not Timing the Market

You can’t control what the market does, but you can control what you do. It’s impossible to consistently predict when the next awful headline will cause a short-term market decline. While avoiding the market altogether can be the biggest hurdle to wealth creation for retirement, trying to time a market downturn can significantly jeopardize your financial well-being. Historically, you are more likely to realize additional growth in your investment portfolio by staying invested than pulling your money out. When the markets go down, they will eventually go back up. And in the meantime, you can be buying stocks at a much lower cost. (For related reading, see: Timing the Market with 401(k) Stocks? Bad Idea.)

Fighting Fear With Facts

One way to offset any investing fears you may have is to look at corporate profitability and its relationship with the stock market over time. As American and overseas companies have continued to innovate and grow profits over the last eight decades, the stock market has generally followed suit by climbing higher. When companies do well, stockholders do well. Looking shorter-term, since 2008—despite acrimonious political party divisions, major environmental catastrophes, terrorists strikes, etc.—rising corporate earnings have been a stabilizing force for the stock market.


It’s not always easy to have the intestinal fortitude to ride out the stock market’s sharp market declines. That being said, by constructing and sticking to a well-thought-out investment plan and having long-term compounding in your favor, you can avoid making disastrous, short-sighted investment decisions. Attempting to time the market has historically jeopardized returns and the most carefully made investment plans. You have to stay in the market to build wealth over time with your portfolio. 

(For more from the author, see: High Mutual Fund Fees Can Be an Investment Drag.)


Disclosure: LCV Advisors LLC is an Investment Adviser registered with the State of Illinois. All views, expressions, and opinions included in this communication are subject to change. This communication is not intended as an offer or solicitation to buy, hold or sell any financial instrument or investment advisory services. Any information provided has been obtained from sources considered reliable, but we do not guarantee the accuracy or the completeness of any description of securities, markets or developments mentioned. We may, from time to time, have a position in the securities mentioned and may execute transactions that may not be consistent with this communication’s conclusions. Please contact us at (847) 574-8645 if there is any change in your financial situation, needs, goals or objectives, or if you wish to initiate any restrictions on the management of the account or modify existing restrictions. Additionally, we recommend you compare any account reports from LCV Advisors with the account statements from your Custodian. Please notify us if you do not receive statements from your Custodian on at least a quarterly basis. Our current disclosure brochure, Form ADV Part 2, is available for your review upon request, and on our website, This disclosure brochure, or a summary of material changes made, is also provided to our clients on an annual basis. 

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