By Josh Katzowitz, WCI Content material Director
Each time a bull market enters a correction interval or, even worse, turns into a bear market and white coat traders lose tens of 1000’s, lots of of 1000’s, or hundreds of thousands of {dollars} in a brief period of time, the query inevitably seems:
“Is that this time completely different?”
We all know that the inventory market has all the time gone up and to the correct over time.
If you happen to want proof, this is a very good illustration of how time available in the market has all the time labored to your benefit.
If you happen to keep available in the market lengthy sufficient, historical past tells us that we WILL generate profits despite the fact that we’ll most likely additionally need to undergo some deep dives. That’s why Dr. Jim Dahle is all the time preaching about staying the course, why different traders talk about shopping for the dip, why WCI columnist Rikki Racela writes about his lust for shopping for shares on sale, and why Warren Buffett proclaims that you ought to be grasping when different individuals are fearful. A down market is a ripe market to generate profits.
All of that’s good recommendation. However when the dot.com bubble burst or the Nice Recession started or when the Coronabear period made traders’ lives further tough, the query all the time got here: Is that this time completely different?
The final 12 days have been chaotic. After President Trump raised tariffs throughout the globe throughout his so-called Liberation Day on April 2, the markets have largely plunged right into a downward spiral. Within the two days following Trump’s announcement, the market suffered its greatest two-day decline prior to now 70 years, and greater than $6 trillion was nearly immediately erased. Whereas there was a little bit of reduction a couple of days in the past (when most tariffs have been paused for 90 days) and the market had one in all its greatest one-day jumps in historical past, the remainder of the week largely introduced extra ache. On April 1, the Dow Jones stood at 40,225; on the finish of April 11, it was at 40,212.
If you happen to’ve not too long ago checked out your 401(okay) or your taxable brokerage account, you most likely felt a wave of nausea. Throughout web boards and remark sections, the identical query is effervescent to the floor as soon as once more: Is that this time completely different?
The perfect reply I can provide is type of however most likely not. Now, in an effort to assist squash emotions of panic-selling and to step out of no matter political bubbles are telling us that this market downturn is a stroke of genius or a stroke of insanity, let’s flip to the monetary specialists we belief to see what they’ve stated not too long ago about what to do—and about whether or not this time is in some way distinctive in historical past.
Is This Time Completely different?
Right here’s what Suze Orman wrote on Fb on April 4:
“I do know lots of you’re afraid of what is occurring within the financial system and the inventory market. So this is my take: We’re one other down day for the markets at present. Why? Properly, China has retaliated, and that is obtained traders on edge. The markets are projected to go decrease consequently.
Now, I do know lots of you’re dollar-cost averaging—and that’s nonetheless OK—however please hear me on this: if you are going to proceed that technique proper now, do it with critically tiny quantities. This isn’t the time to be aggressive.
We’re seeing indicators that really feel rather a lot like 2022. Risky. Emotional. Unsure. And but . . . I would like you to breathe. Markets will ultimately get better. However not . If these tariffs keep in place, it is going to take time. So bear in mind: cash you’ve available in the market ought to have been cash you didn’t want for at the least 5 years. Let this play out.
If you’re contributing to a retirement account, don’t cease. Keep the course. Preserve investing steadily. That consistency is your energy.”
Right here’s what Mike Piper wrote on The Oblivious Investor on April 7:
“If you happen to’re considering, ‘This time is completely different!’ sure, you’re proper. This time is all the time completely different. That’s the important thing factor to know.
In early 2020, we noticed an especially fast decline, coupled with a pandemic. That was definitely a brand new and scary expertise. In 2008-2009, we noticed a fast and enormous decline, coupled with main monetary establishments collapsing and a non-trivial risk of the entire thing turning into system-wide if too many massive establishments failed. That was a brand new and scary expertise. In 2000-2002, we noticed a big decline that simply saved on going and was coupled with issues like main accounting fraud scandals. May we belief that the market wasn’t only a rip-off, rigged towards the little man? It was a brand new and scary expertise.
That’s how this stuff go. A major market decline doesn’t occur out of skinny air. Such declines are usually accompanied by some scary real-world occasion.
If you happen to’re going to spend money on the inventory market, you must be ready to see massive declines sometimes, coupled with one thing scary occurring.”
Right here’s what Warren Buffett wrote in February in his annual Berkshire Hathaway shareholders’ letter. He’s clearly not addressing what’s occurred this month, nevertheless it’s nonetheless instructive. Keep in mind, Buffett raised eyebrows on the finish of 2024 by amassing $334 billion in money—observers opined on the time that he was frightened in regards to the Trump presidency and needed a security internet or that he needed all that money so he might dump extra of it into the market when the downturn got here.
“Regardless of what some commentators presently view as a rare money place at Berkshire, the nice majority of your cash stays in equities,” Buffett wrote to his shareholders. “That desire gained’t change.”
That is what JL Collins wrote in November 2024, quickly after Trump was elected to his second time period. Kudos to him for invoking a bit Greek mythology in his evaluation.
“. . . To me, it looks like we might see a big bear market someday down the street. Love him or detest him, Mr. Trump is a disruptive drive and Mr. Market hates disruption. Plus, one is due. We’re on the pinnacle of a large 15.5-year bull market and such runs don’t final without end.
So, time to maneuver to money?
Not for me. My self-discipline stays the identical. Nobody can predict Mr. Market, least of all me. I’ll stay totally invested.
Ought to my bearish hypothesis show right, I’ll have tied myself to the mast and can keep invested, and investing, because it rages and passes.
Ought to the Mr. Market proceed this historic bull run, I’ll be proper there with it.
That is The Easy Path to Wealth.”
Ramit Sethi wrote the next in his e mail publication on April 8:
“I’m not promoting. That is the second when even disciplined traders screw up. I’ve been seeing it throughout Reddit and Twitter. Individuals who’ve been screaming ‘purchase and maintain’ for years all of a sudden panic and promote every thing after a couple of unhealthy days. It would really feel logical within the second, nevertheless it’s nearly all the time a devastating long-term resolution.
If you happen to’re investing for the long run—and you ought to be—then you definitely don’t have to panic. I’m not promoting a factor. My portfolio is constructed for the lengthy recreation, so I’m not touching it for an additional 10, 20, 30 years.”
As for what Jim Dahle thought through the Coronabear drop, right here’s what he needed to say in 2020:
“I’ve come to find that it actually would not matter what I write prematurely. I have been writing about bear markets; about behavioral funds; about why you want a monetary plan and how one can write one; in regards to the significance of staying the course; about why it’s good to not attempt to time the market, decide particular person shares, or use actively managed mutual funds; about how one can hold funds of their correct place in your life; and how one can earn, save, make investments, spend, and provides nicely.
However one massive market downturn and it is prefer it’s a model new weblog that no person has ever learn earlier than. The WCI Discussion board is in some way now filled with market timers. The WCI Fb Group is in some way now filled with inventory pickers. The Bogleheads discussion board is satisfied that this time it is completely different . . . Guess what, guys? I am nonetheless right here. The message continues to be the identical:
- Earn as a lot as you may whereas sustaining stability in your life
- Save at the least 20% of your gross earnings for retirement
- Make investments it into a hard and fast asset allocation, diversified between shares, bonds, +/- actual property
- Preserve your prices low
- Do not attempt to time the market
- Use low-cost, broadly diversified index funds
- Use tax-protected, asset-protected investing accounts as a lot as potential
- Develop and comply with a written investing plan
- Preserve a long-term perspective
- Get good recommendation at a good value
- Rebalance, tax-loss harvest, and donate appreciated shares to charity in lieu of money.”
So, is that this time completely different? Sure, every market drop is all the time completely different. Perhaps the query must be: do you have to do something completely different? The reply, at this level, continues to be no. Lash your self to the mast and plug your ears with beeswax so that you don’t hear the Sirens’ name to panic-sell. And hopefully, we’ll all be alright ultimately.
Extra data right here:
Getting Higher on the 5 Cash Actions
Your Crystal Ball Predictions for 2025
Cash Music of the Week
The overwhelming majority of individuals within the US aren’t going to really feel sorry for a millionaire who isn’t comfortable. However maybe the readers of this website can spare a bit sympathy for a rich one that feels unhappy. So, when WCI columnist Adam Safdi advised I hearken to Kacey Musgraves’ 2024 track Lonely Millionaire for Cash Music of the Week, I used to be all about it.
As Musgraves suggests, millionaires wish to be cherished and fulfilled. They don’t wish to be caught by themselves on their non-public jets and gold watches.
As she sings,
“Who needs to be a lonely millionaire?/Comin’ house, ain’t nobody there/That you could speak to in your king-size mattress.
Watch out what you want for, I see it on a regular basis/The cash and the diamonds and the issues that shine/Cannot purchase you true happiness.”
The subject material of how cash can’t purchase you like and happiness is a continuing trope in music. However that’s not what me after I began enjoying this track.
What actually struck me about this track was that Musgraves didn’t carry out like a rustic singer who used to croon about area cowboys and Mama’s damaged coronary heart. As a substitute, she jogged my memory of Sade at her strongest who additionally samples beats from rapper JID and employs a strong acoustic guitar. Perhaps the sort of music isn’t uncommon for Musgraves (I’ve barely ever listened to her earlier than, so I don’t have any sort of gauge on her, although she has stated she makes nation music for individuals who like nation music and likewise those that don’t).
However I do know that the track shocked me in a great way.
“If you happen to take a look at the information I’ve made since Day 1, they’ve all the time been an enormous patchwork quilt of so many alternative influences,” Musgraves advised Vogue. “I don’t assume I may even actually say 100% what my very own music is.”
Requested particularly about Lonely Millionaire, she stated, “There have been undoubtedly some examples that I’ve seen of that within the trade. However I noticed a quote the opposite day that stated one thing like, ‘The last word wealth is being in tune with the stream of nature.’ The last word wealth is already in you, you already know what I imply? It’s not an outdoor factor.”
Alas, this track is far deeper than I initially believed. Perhaps I ought to hearken to the remainder of that Deeper Properly album, as a result of man, Musgraves definitely seems like a easy operator when she’s singing.
Extra data right here:
Each Cash Music of the Week Ever Printed
Reddit of the Week
For a lot of readers, I think about 1998 doesn’t appear all that way back. However then you definitely check out this grocery retailer receipt from 27 years in the past, and it appears as if you’re one thing from a wholly completely different world.
As for a way grocery costs at present evaluate to inflation features from 1998 till now, you may look within the feedback of that Reddit thread. You’ll be able to see that recreating the listing at present prices about $91. However that $30.82 from 1998 is value $60.82 in 2025 {dollars}. Which implies we’re paying extra for groceries at present than we did again then.
How frightened are you in regards to the newest inventory market outcomes? Are you staying the course? Do you assume this time might be completely different?
[EDITOR’S NOTE: For comments, complaints, suggestions, or plaudits, email Josh Katzowitz at [email protected].]
