You’ll often see headlines like “The Dow drops 1,000 points!” and it sounds dramatic. But the important thing to remember is that points aren’t percentages. When the Dow is around 50,000, a 1,000-point move is only about 2%. When the Dow was closer to 20,000 — and this was just five to seven years ago! — that same 1,000-point move would have been closer to 5%. The number sounds the same, but the impact is very different.

For a little extra perspective, when I started doing this over 23 years ago, the Dow was around 6,000… and I promise I’m not that old 🙂.

Markets naturally move around. 1% swings are normal on any given day, and even 2% moves up or down, while they grab headlines, usually don’t change the long-term picture much. A single headline can move markets quickly in either direction—and just as quickly reverse.  I’ve noticed over the last decade the swiftness of market drops and rebounds and new highs is at a much higher velocity, likely because of how fast news travels and our social media culture.

We also know the current Iran and oil situation can feel unsettling and can cause the mind to wander toward questions like, “Is this the next recession?” The media will often amplify that fear. Even when we do experience another downturn at some point, it’s helpful to remember how recent history has played out. We saw this during COVID in 2020 and again during the 2022 market decline, only for markets to recover and eventually reach new highs in relatively short order.  In fact, during March 2020 I sat at my desk (with Jolene under my feet of course) and watched the market fall over 30% in around 30 days- fastest drop ever in the market…followed by what?  A record fast recovery in a matter of weeks to finish the year with double digit returns.  Wow.

I know you hear me say this all the time, stay the course. But I wanted to share a little statistical context to help put some of these headlines into perspective.

Our job isn’t to react to the headlines. It’s to stay disciplined and focused on the long-term plan designed to guide us through both calm markets and noisy ones.

As always, if you ever want to talk through what you’re seeing in the news, feel free to reach out.