Market volatility is normal – staying invested is essential
A guide to investing through the noise
Praleena Mudley
The year has started on a different note than most investors anticipated. Since global equities reached their peak in December 2024, there has been a noticeable increase in political uncertainty, which has influenced broader economic considerations. A key factor in this development has been the implementation of tariffs by US President Donald Trump. On the 2nd of April, President Trump announced the biggest break in America’s trade policy in over a century.
As uncertainty rose it was reflected quite quickly in the market, with the S&P 500 pulling back more than 13.5%, and the NASDAQ has dipped into correction territory, down -17.1% since 4 April 2025.
Graph 1: Recent market drawdowns
Source: Morningstar Direct, data as at 4 April 2025. Past performance is not a reliable guide to future performance. For illustrative purposes only and not indicative of any investment.
As investors, we often experience loss aversion, where the pain of a loss is felt more intensely than the pleasure of an equivalent gain. It is crucial to view recent drawdowns in a broader context. Although the current stock market drawdowns may be causing discomfort, it is important to remember that US stocks had been rising steadily for nearly 18 months, including consecutive calendar year returns exceeding 20% in the S&P 500. And how painful it might be, pull backs are completely normal, as illustrated below in Graph 2.
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