How an Unsteady Market Is Leading Everyday Investors to Buy and Hold
10:12 Share

Unlock tomorrow's potential with PGM Active ETFs today. Our ETF solutions meet investors' evolving needs, leveraging 150 years of active investment experience and deep institutional knowledge across asset classes. With a diverse range of over 50 low-cost ETFs, we help investors navigate today's changing market and position for the future. PGM. Our investments shape tomorrow, today.

Visit us at pgm.com forward slash ETFs. Here's your money briefing for Thursday, May 29th. I'm Mariana Aspuru for The Wall Street Journal. You may have been tempted to make some big changes in your portfolio after last month's market volatility. But some investors are seeing it as a reason to stay put.

Particularly in a moment like this where the headlines and the short-term swings can be maybe nauseating to watch, it might serve those investors well to focus on the long term as opposed to these day-to-day developments. We'll talk to Wall Street Journal reporter Hannah Aaron Lang about how some investors are using this moment to test their appetite for risk. That's after the break.

This message comes from Viking, committed to exploring the world in comfort. Journey through the heart of Europe on an elegant Viking longship with thoughtful service, destination-focused dining, and cultural enrichment on board and on shore. And every Viking voyage is all-inclusive with no children and no casinos. Discover more at viking.com. The market bounced back in April. So some investors are trying to decide if they should take the second chance at cashing out.

Wall Street Journal reporter Hannah Aaron Lang joins me to talk about it. Hannah, you wrote about how this is a possible do-over for investors. Tell me why is that? We've had a moment in markets recently where we just experienced what I would call extreme volatility. And it stood in pretty stark contrast to what we saw stocks do in 2023.

and 2024 overall. Those were two pretty good years for investors. If you were an individual investor not too actively managing your portfolio, you saw pretty reliable and steady gains over the course of those two years. And that's very different from what we saw happen in the spring of 2025. There was this kind of immense turmoil.

turmoil in April as a result of President Donald Trump's tariff plans. Markets reacted very sharply to that at the beginning of April. But then the markets bounced back. And now many investors are in a place where they have more or less regained the losses that they saw in the aftermath of that tariff announcement. And so this kind of serves as a moment where

to check in for some individual investors in regards to their portfolio and maybe an opportunity to...

reevaluate or rethink the level of risk that they can tolerate in their portfolios or in their investments. In a stock market like this, you have a few options. I want to run through those. First off, staying put. Yeah, one of the options is just holding on. And frankly, we've seen a lot of investors do that. History kind of shows that if you stick with what you own, if you hold on to your investments through those downswings, that you're

you'll mostly be made whole and come out on the other side in good shape. Research shows that missing just a handful of the stock market's best days over the past several decades could shrink your long-term returns by, you know,

More than 30 percentage points. I should mention that those standout days typically happen in markets that we might consider to be downbeat. Two of the best days on record for the S&P 500 happened in October 2008, right? One of them was April 9th.

in 2025, just this past month in the midst of this volatility that we're speaking about. So there's a lot of logic and evidence that holding on or buying the dip is an option that many investors feel confident opting for. So when we talk about buying the dip, that's what we hear a lot when we see a market downturn.

What are some of the risks and possible rewards of doing that? There's always the risk that you could buy the dip and then stocks could fall further. That's definitely something to think about. But that being said, if you bought the dip during this past year,

during 2025 thus far, you're in really good company. We know that by and large, individual investors are sticking with stocks. We saw them plug more money into stocks and stock funds in great numbers during the April downswing. A lot of the investors I speak to

that have employed this strategy are quite young. They have decades of their life to stay in the market and be invested and watch those investments grow. So they're more confident that over time, they will eventually regain that value.

But Hannah, not everyone is willing to take that risk, right? I have heard from some financial advisors that I've spoken to that this has served as an opportunity for some folks to go to their advisor or reconsider their portfolios and say, hey, I actually don't think that my risk tolerance was as large as I may have expected or

So like this first time was a rehearsal, and now they're trying to figure out if they want to make a different decision based on the risks that they experienced the first time. What are you hearing from people? When I speak to financial advisors, they're really quick to bring up the fact that

Unlike maybe the traders or the professional investors that we might speak to on Wall Street, most people are not day-to-day actively managing their portfolio. They're investing for the long term, for college tuition, for retirement. And it might serve investors well, particularly in a moment like this where the headlines and the short-term swings are

can be maybe nauseating to watch, it might serve those investors well to focus on the long term as opposed to these day-to-day developments. Because the long-term trend of the stock market is up and to the right, as they say. In an uncertain market like this, how can someone sort of dial down that risk and limit their exposure?

So let's say you experienced this experience

moment in April, you watched stocks fall and the value of your investments fall alongside it. And that was a really difficult experience for you. You started to feel a little squeamish about the risk level of your portfolio. And maybe you want to check in on that and that piece of your investment strategy. There's a few things that you can do. There's always cash, money market funds, right? Selling some of your stock holdings and just

putting that money into cash. There's kind of similar options like certificates of deposit, CDs, which offer an interest rate for plugging cash in for a set period of time. And then there's the classic alternative to stocks, which is bonds. And in this environment, some financial professionals are actually recommending that an

Investors get them a closer look. Vanguard has recently suggested that some investors maybe consider flipping the 60-40 portfolio, which is this very kind of classic traditional split between 60% stocks and 40% bonds in a person's investments.

The idea being that one is meant to balance out the other over the course of time. Vanguard has suggested potentially switching that ratio in this environment. So 40% equities or stocks and 60% bonds. And that's a reflection of sort of the risks out there in the market right now.

The idea here is that you would be dialing down your exposure to downswings in the stock market. You're shrinking the balance.

proportion of stocks or stock funds that you own relative to other potentially less risky assets in your portfolio, with the caveat that, you know, this could mean that if stocks go up again quite significantly, that you could miss out on some of those gains. That's Wall Street Journal reporter Hannah Aaron Lang, and that's it for your money briefing.

I'm Arianna Aspudu for The Wall Street Journal. This episode was produced by me with supervising producer Melanie Roy and deputy editor Chris Sinsley. Thanks for listening. Isn't home where we all want to be? Reba here for Realtor.com, the pro's number one most trusted app. Finding a home is like dating. You're searching for the one. With over 500,000 new listings every month, you can find the one today.

Download the Realtor.com app because you're nearly home. Make it real with Realtor.com.