Patience is a Virtue
The stock market is a device for transferring money from the impatient to the patient.
-Warren Buffett
As of May 30, 2025, the S&P 500 index has experienced a modest year-to-date (YTD) gain of 1.06%, a gain of 6.29% for the month of May and a gain of 13.52% for the past twelve months. As my colleague, Fred Snitzer, noted in last month’s PartnerTalk, these returns mask what has been a very volatile and difficult few months.
However, as the excellent article by Ben Carlson, Warren Buffet on Time Horizons, points out, your odds of success in investing in equities are vastly improved the longer you stay in the game.
And that makes sense when you look at the S&P 500’s annualized returns over the long run: 15.94% the past 5 years, 12.86% the past 10 years, 14.08% the past 15 years, 10.47% the past 20 years, 10.37% the past 30 years, 11.41% the past 40 years, 11.72% the past 50 years, and from 1926 through 2024 an average annualized return of 10.3% per year!
Despite the extreme volatility that can occur in the short-term, for investors, this underscores the importance of maintaining a long-term perspective and avoiding reactive decisions based on short-term market fluctuations.
In June of 2018 I wrote about an old Wall Street adage: “Sell in May and go away.” Like many market adages, it has the charm of folklore and the illusion of simplicity. The idea is that markets underperform during the summer, so why not sell your equities, enjoy a relaxing season, and return to investing in the fall?
The temptation is understandable. Who wouldn’t want to sidestep volatility and take the summer off with their wealth intact? But while the phrase may be catchy, it conceals a flawed proposition: that short-term market timing can beat long-term strategy. In fact, history—and significant academic data—suggest otherwise.
Instead of trying to avoid short-term downturns, long-term investors benefit far more from staying invested. Over decades, equities have delivered positive real returns by compounding earnings, reinvesting dividends, and benefiting from the growth of the global economy.
Consider this: If you had invested $10,000 in the S&P 500 at the start of 2000 and left it untouched through 2024, your investment would be worth $70,274. But if you had missed just the 10 best days in the market during that entire 25-year span, your investment would be worth only $32,195. (J.P. Morgan Asset Management)
And here’s the twist: seven of those 10 best days occurred within two weeks of the 10 worst ones. Investors who bailed during volatility, no matter what time of year, likely missed not only the downturn but the powerful rally that followed. (J.P. Morgan Asset Management)
In the words of Kenneth Fisher, “Time in the market beats timing the market.” The stock market punishes those who flinch at every headline and rewards those who ride through the storm. It rewards patience—not predictions. Patience in investing does not mean ignoring reality. It means recognizing what you can control and what you cannot.
You cannot control the Fed, tariffs, earnings reports or oil prices or investor sentiment. But you can control your plan.
Being a patient investor means:
- Staying invested through short-term volatility and trusting your long-term plan rather than reacting emotionally to daily market swings.
- Rebalancing when appropriate, not reactively, and adjusting your portfolio based on strategy and goals, not fear or hype.
- Avoiding headlines as investment advice and understanding that financial press is often reactive, not predictive, and rarely tailored to your situation.
- Spending with flexibility, especially in retirement, and adapting withdrawals to market conditions, which can dramatically improve the longevity of your portfolio.
- Evaluating your financial/investment plan annually, not weekly, and staying focused on your time horizon and adjusting only when your goals or life circumstances change—not because of market noise.
The temptation to react to short-term distractions, whether it’s market volatility, political headlines or the financial press, is ever-present. But as history and data continue to show, patient investors who stay focused on their long-term goals are consistently rewarded.
Although there are no guarantees – investing necessarily involves taking risk – and the past is not necessarily prologue, the facts to date support the theory that over time, those who stay invested, rebalance thoughtfully, and resist emotional decision-making tend to come out ahead. So, as we head into the heart of summer, I encourage you to revisit your long-term plan. If it still reflects your goals, risk tolerance, and time horizon, stay the course. And, if you have questions or want to discuss your strategy, we’re here, steady and focused, as always.
Wishing you a restful and rewarding summer season.
