S&P to go down more than 40%? Part II

Imagine this. The S&P 500 fell approx. 15% in 1973 and then another 25% in 1974. It is a loss of almost 40% over two years. In fact, the fall in the top-to-trough had been close to 50% compared to just a few years! (Market accidents compared). Now consider this: If you had invested $ 1 million in the S&P 500 on December 31, 1972 – just before two of the worst years for the benchmark index – what would have transformed until the end of 2024? Here is a request: Write your answer before reading ahead.

First, your millions of dollars would have turned to about $ 600K in the first two years of your investment. It would feel bad. No, that would be terrible! But here is what would have happened to your money next time: Over the next 50 years or so, your $ 1 million would have turned to $ 200+ million by the end of 2024! A solid 200x, even after explaining the massive decrease of 40% in advance in the first two years! Let it sink in. Related: Trefis HQ portfolio strategy Beat S&P, with> 90% return since HQ’s inception in September 2020.

In our previous analysis on the same topic – S&P To go down more than 40% – the first part, we detailed how the 3 pillars of the Trump Administration Plan: 1. Customs. 2. Taxes. and 3rd deportation – in combination has the potential to stake inflation and create a deep market drop similar to what we saw in 1973/74. In this part II of the analysis we use one Completely different lens To consider “so what” of big drops – especially now in 2025.

Problem worth solving

Around the holidays we spoke with Pete Martin, former distribution manager for a $ 1 trillion investment manager. At one point the conversation showed a simple question: What is a problem worth solving in the investment space?

Pete’s answer: People are just firmly wired to invest at exactly the time when they should be afraid and actually end up not investing when they were eager to invest.

The problem that is worth solving is simple: It’s for all of us to Focus on the long term. Every day, keep an eye on our long -term investment goals, even as – and especially when we see the screen right in front of us flash green and ed. Resist reaction. That’s it.

1,000x at stake!

Hard number supports Pete’s claim. Consider another related broad question: If you earned 15% or even a humble 10% annual return on an investment of $ 1 million over, what would 50 years, what would it be? For context, Trefis HQ portfolio strategy beat the S&P 500Won big and offer better risk -adjusted returns. HQ Performance Metrics here. The case is 10-15% return is feasible.

Here’s another thing most people find a 2x return over the next 1-2 years more attractive¹. Contrast it with a 1,000x upside – literally. Your investment of $ 1 million to a 15% annual return over 50 years would make you a billionaire. Even a 10% return is a nice $ 100 million you can log in. Not so humble after all! The point is simple: If you want 2x wealth, focus on the short term. But if you are serious about setting up a 1,000x return, think in the long term!

And yes, be boring – active – in the short term. So what do you do – what does “actively boring” mean? Does focus on the long term mean not to do anything right now? Of course not. On the contrary. It’s actually about being active and data driven.

Here are two examples of actions.

Action # 1: Add a calendar reminder

Add a warning to the next FED Meeting, currently scheduled for January 29. Markets can move a lot. Add an entry to Review This perspective of previous crashes. Seriously, a calendar reminder to undergo an analysis that only gets one entry when things go down – historically once in 10-20 years – and helps remind us that even in these situations followed a remarkable improvement every time . Almost everyone undergoing this analysis says: Huh, the “big” 1-day movement, was really just a blip in the larger schedule with things. Why respond to blips?

Want more food for thought? Examination Buy or fear analyzesand consider a possible scenario for a large fall in S&P or our Investment and AI Analysis, with HQ Outperformance Journey.

Far from sitting inactive, it is actively boring about searching data and asking questions – asking “why” – in good times and bad. Suppression of reaction and channeling the energy to learn. So being “actively boring” is really about thinking ahead. It’s about planning. And if you want to do this right, there’s another dimension to plan it right.

Action # 2: Trust a team

Even better than planning for an event like the next bold meeting, go ahead and Plan a chat With Glenn Caldicott, CIO of empirical. In fact, we’ve built a team of maths/AI experts – Mits Sandy Pentland and Ankur Moitra, More about the team hereRight with market practitioners like Pete Martin and Glenn Caldicott, who have invested 30+ years to help create wealth. Actually feel free to ask Glenn about our Long -term strategies and process. Ask him about the markets, alternatives to S&P, and why the Trefis HQ strategy that has surpassed S&P has worked. But also ask about asset allocation strategies that he has used with Ultrahøj Net Doin clients, and with smaller clients, which helps them create wealth by maintaining wealth in bad times such as the 2008 crisis and inflation in 2022.

The point is: Don’t go solo. We have found that if you want to limit impulses and want to be less reactive, it helps to work with a team. A team to help develop and set achievable long -term goals. If nothing else, for most people who even work with a trusted partner help spouse or friend. Ideally, you do more than that – and work with a team of experts. Experts who help you be data -driven. Be prolonged partical.

To be clear, being actively boring is not the usual index fund type boring. It involves resistance to reaction while you are curious. Search Data – Search to be data -driven, only Data driven. Search to be an active investment citizen. Because it is exactly how you can execute to be boring in the next 50 years². For the past several years we have built these principles right into our Thinkhub Million Analyst Aspirational System – highlighted in Active citizenship of investment.

Stepping back – emotional reaction

We have synthesized here 3 concrete examples of market situations that traditionally trigger emotional reactions. They seem simple – but become much easier to respond to in practice if you operate in a team.

Example 1: Strong, steady success. The S&P 500 has had a solid race in the last few years. However, the simple 30-store-only Trefis HQ portfolio strategy Better than S&P – The newer Trefis RV strategy is doing even better. See: The wider HQ and Trefis Story

Question: So is it time to double S&P or HQ? How about taking profits?

As sad as it sounds – you guess it implies long -lasting focus not Jump to an answer. Lower down to go quickly – start by setting your goals. Writing them down is the key – otherwise it doesn’t count. Then, in any case, if you have extra investable cash, go ahead – assign it in a way that is consistent with your goals.

Example 2: Big features. Long -term focus also does not mean to sell when the market and our favorite fund or ETF fall 10% or even 30% for that matter. The flip side is also true: let’s not stretch for thin, take large loans to go after the hot run of a momentum stock.

Example 3: Comparisons. It is difficult to suppress the urge to change -wait, “Nasdaq surpasses S&P”, or “Trefis Ten -Stock strategy surpasses HQ”: “Should I change?” No. Change can actually make you move at exactly the wrong time. Search instead data. Search to understand “why” of performance-compared it with your written long-term goals and the plan you have developed with your team of experts. If it makes sense, gradually build a position.

If all this sounds simple, why is it so hard to think about the long term and look beyond what blinks on the screen in front of us? We live for decades – not minutes or hours – we all know that.

Why do we often act as if we have the life of a fruit fly?

Why feel the urge to respond to 1% or even a 10% movement – why stress over every little shock in the way? It is the biological struggle or flight – the survival instinct that is ingrained in humans – according to Pete Martin, and my professor Andrew LO, studied behavioral financing extensively. The flashing red and green sparkle and appealing to the firm, intuitive, reactive part of us. To clarify, the flashing red on a stock or financial app is definitely not designed with the mindset: OK, this will make investors rational and long-term focused. They are designed to engage you right now – the red and green have no interest in being boring. You will be boring in the short term and exciting in the long run when it comes to your finances

Will you be wealthy? Focus on the long term and Choose to be boring! Targeted boring. Actively boring.