Big Swings in Stocks Teach Two Powerful Lessons

The Power of Patience: Why Market Dips Can Lead to Big Gains

Markets are back on a rollercoaster. The S&P 500 dropped 2.4% Monday, just weeks after a historic rally — a reminder that wild swings are part of the stock market’s DNA.

Keith Lerner, co-chief investment officer at Truist Wealth, says history is repeating itself. Major selloffs, like those in 1987, 2008, and 2020, were often followed by sharp two-day recoveries of 9% or more — just like the 9.5% bounce seen on April 9.

If a recession hits, past patterns suggest investors could still see powerful gains: on average, 40% returns one year after a bottom, 54% after two years — well above the S&P’s long-term 10% annual pace.

This volatility carries two clear lessons:

● For individual investors: Staying in the market despite painful drops is crucial. While savings accounts offer around 4%, history shows stocks reward patience with much higher returns over time.

● For professional investors: Selling after steep drops can be costly. Missing even a handful of the S&P’s best days could slash long-term gains by more than half.

Data makes it clear: some of the best days come right after the worst. Emotional reactions during selloffs can be a portfolio’s biggest enemy.

For pros, the task is to manage client fears without missing the upside. For everyday investors, the best move is often the simplest — stay put and trust the process..