Coming Downstairs in the Morning

What a week! I jog down memory lane to visit the wild market ride from five years ago. At the end of the day, there are a lot of things to reassure us that our approach is the right one.

In the short run, the market is a voting machine but in the long run it is a weighing machine. -Ben Graham

And vote it did!

This quote is sometimes attributed to Warren Buffet because he quotes it frequently, but the great Benjamin Graham¹ first wrote it in 1949.

His basic premise is that over the short term, the market is irrational, emotional, and extreme at times. These traits are more like the process of voting: largely subjective, sometimes irrational, and at times tribal. ("groupthink")

Long term, the market behaves more like a "weighing machine," taking into account all of the objective facts and then weighing the odds and options to arrive at a rational, overall valuation of the company or economy at hand.

We are, at the moment, still in the "voting" phase.

---

The Walk Downstairs

As I'm sure you all remember, almost exactly five years ago, we were hit with the COVID shutdown. At the time, no one was sure of the extent of the closures and their effects on the worldwide economy. Would the disease keep the economy shuttered for months? Years?

I recall coming downstairs to my office each morning and wondering how much the market would be down today. These were BIG numbers, day after day, for over a month (2/19/2020 to 3/23/2020):²

• 2/25/2020, -3.03%

• 2/27/2020, -4.49%

• 3/5/2020, -3.32%

• 3/9/2020, -7.81%

• 3/11/2020, -4.87%

• 3/12/2020, -9.57%

• 3/16/2020, -10.94%

• 3/18/2020, -5.06%

• 3/20/2020, -4.87%

By the time the selling stopped, the market had touched an intraday loss of 35.63% of its value in only 23 trading days!

This is truly remarkable. Record-breaking, in fact.

So We’ve Been Here Before

It's not my intention to elicit uncomfortable memories of the COVID period; I just want to remind everyone that we've been here before and relatively recently as well.

In fact, this is the third significant selloff in just the last five years (2020, 2022, and now 2025), and we've come through them all. Some took longer than others, but all ultimately recovered and moved on to new highs. Every. Single. Time.

It may seem so 'scary' as we enter one of these periods because there's some fear of the unknown and a little shock about the speed of the selloff—as if the bottom is dropping out.

Sawtooth, just like the markets.

There's an old saying that "the market takes the stairs up and the elevator down."³ This gives the markets a sawtooth character, with hard-fought gains coming slowly and methodically, only to be followed by the occasional chaotic and sometimes violent process of giving back a quarter to a third of our gains.

These gains, which in some cases took years to accumulate, are disheartening (to say the least) to see partially given back so quickly.

Some Reassuring News

1. As far as these types of selloffs go, the "V-shaped" selloffs, like the COVID selloff and what this one is shaping up to look like, are usually fast to go down and as equally quick to recover. It’s the slow-grind selloffs like 2008 and 2022 that are typically the most damaging from an opportunity cost and psychological perspective.

2. The level of fear in the market is historic at the moment. The measure that many analysts use to judge this is called the Volatility Index (VIX). Historically, the VIX runs between 19 and 20, with readings below 19 indicating very calm and consistent markets.
   
   Analysts often observe that a VIX reading above 35 or 40 often marks extreme volatility and is often associated with capitulation or the climax of a selloff. The VIX closed Friday at 45.30⁴, so there may be some opportunity for everyone to catch their breath in the near future.

3. On Friday, the price of oil dropped 7%, which will help the economy going forward. Also, March's jobs report did bring good economic news, as the U.S. added 228,000 jobs, beating expectations.
   
   Fed Chair Jerome Powell also indicated that other 'key indicators' the Fed uses "still show a solid economy. " Although these were all pre-tariff numbers, the hiring was done with the expectation of tariffs and it also demonstrates that our economy going into whatever happens next is starting from some pretty sound footing.

4. When we (meaning you and me) look at the risks and returns in the stock market, our historic calculations and results ALWAYS include these types of selloffs. This means that as we review our expectations going forward, we have viewed them in the context of a past that already considers and takes into account all of these weird and wild periods.
   
   We haven't just looked at the good times. We haven't just discussed making money. We've also discussed losing money. We’ve considered the tough times. We try to emphasize risk.
   
   We've talked about how you would feel and how we would manage times like these precisely for this purpose: to prepare you in advance for these known periods when the stock market is going to act weird and wild and likely disappoint you in the short term.

5. All of our retirement cash-flow planning is done with enough leeway in our expected results that short-term market moves like this, no matter how crazy and volatile, should have little to no impact on your long-term retirement plans. It’s all short-term noise that we would all do well to ignore.
   
   We also use appropriate allocation strategies and other risk-mitigation techniques that spread out your portfolio risk between stocks, bonds, and other non-correlated investments.

Some Parting Thoughts and Advice

At the moment, there isn’t much hard data in market circles. As always, there are market pundits and soothsayers touting this or that theory or hypothesis. But in the end, it’s just a lot of speculation, pitting this ‘expert’ against that ‘expert’ all while the market makes wild gesticulations about what might or might not happen.

This is neither the time nor the place to attempt to make long-term investment decisions. Shortsighted market participants are making emotional decisions right now, and we should leave them to it, as we have long-term goals in mind.

I remain firmly committed to a tactical, data-based approach to investing, continuing to do the things that help protect us from experiencing large, long-term losses. Naturally, the markets are fickle, and there are no guarantees that we can continue to accomplish this, but this is our objective and what we've built our investing strategies upon.

---

I encourage anyone who has any questions to reach out to me. As always, I am completely happy to spend whatever time you need to help you understand your accounts and feel comfortable with how we’re managing them.

If you have questions or concerns about how the current market volatility might affect your personal situation, please let me know, and we’ll review everything together.

Have a great week,

Jeff

1. Mr. Market is an allegory created by investor Benjamin Graham to describe what he believed were the irrational or contradictory traits of the stock market and the risks of following groupthink. Mr. Market was first introduced in his 1949 book, The Intelligent Investor.

2. From my TradingView charting software.

3. The phrase "the market takes the stairs up and the elevator down" is a common Wall Street adage, often used to describe the slow and steady rise of the market and the quick and dramatic falls. While it is not attributed to a single individual, it has been referenced and discussed by various financial experts and analysts.

4. From my TradingView charting software.