When markets rebounded in April, it was one of the fastest V-shaped recoveries on record (chart). It was a reminder that exiting the markets during periods of strain can be costly. In brief, here are some reasons why:
- Markets often reprice faster than underlying economic or geopolitical realities evolve. Equity markets can adjust quickly to new information, while macroeconomic and geopolitical conditions may evolve over longer horizons. This mismatch can make market moves feel disconnected from fundamentals, as markets are inherently forward-looking.
- Historically, some of the best-performing market days occurred shortly after the worst. Missing even a small number of those days can materially affect long-term returns, and re-entering the market at higher levels can often prove psychologically difficult.
- Disruptive events are more common than we may recognize. Geopolitical, economic and financial shocks are a recurring feature rather than the exception. On average, major disruptions occur roughly every two years. Given this frequency, waiting for clarity before investing can mean more time on the sidelines than in the market.
More broadly, history shows that markets have repeatedly absorbed geopolitical shocks and other periods of stress, ultimately recovering and resuming their upward trajectory. Accordingly, staying committed to a long-term investment plan can be one of the best actions investors can take.
*Iran conflict was a 9.1% decline. Source: J.P Morgan, Bloomberg. “Why are stocks at record highs with no Iran resolution?” 4/24/26.
Disclosure:
Although the author is an employee of Q Wealth and/or an employee of a partner firm of the Q Wealth Partnership, this is not an official Q Wealth publication, and the views expressed herein are those of the author alone, and they have not been approved by, and are not necessarily those of, Q Wealth. This is not legal, accounting, tax or investment advice and should not be relied on as such.
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