As investors, we understand and accept – even if we don’t like it – that volatility and risk are part and parcel of investing, that markets often go down, and sometimes sharply, and that the potential loss of capital is the financial – and emotional – cost we pay to participate in what is arguably the greatest wealth building machine in the history of humankind, and that is the US stock market.

Consider, as Warren Buffett has pointed out, that during the 20th Century, the Dow Jones Industrial Average—in the face of two world wars, a depression, a dozen or so recessions, financial panics and oil shocks, a flu pandemic, and the resignation of a US President—rose from 66 to 11,497, a gain of 16,807%. And that long-term perspective is important to keep in mind as markets are buffeted by the crisis in Ukraine, a spike in commodity prices, and the pivot in monetary policy underway at the Federal Reserve. To take a shorter-term view of things, consider that from 2001 through 2021 the S&P 500, through three recessions, the Iraq War, a housing bubble, a pandemic, and the impeachment of a US President rose from 1,148 to 4,766—a gain of 315%. Said differently, over those 20 years, the S&P 500 turned $10,000 into $62,000.

Yet, if an investor had been frightened out of the market – an understandable outcome considering the challenges the economy confronted – and missed the 40 best days for the S&P 500 over those 20 years, that $10,000, instead of growing to $62,000, would have shrunk to $7,100 (see chart). And to take an even shorter-term view of things, consider that last week the S&P 500 saw its worst and best trading day since 2020. The underpinnings that have made the US economy the envy of the world – including, a best-in-class university system; large and deep capital markets; respect for private property; reasonable rates of taxation, and abundant natural resources – remain in place, as do the underpinnings of the ongoing economic expansion – a robust housing market, strong jobs growth, a financially flush consumer and a well-capitalized private sector.

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The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Brinker Capital Investments, LLC, a registered investment advisor. 0447-BCI-3/14/2022