November Newsletter 2025
US Stock Market: Benefits of a Long-Term View
November 2025 Financial Insights Newsletter
By Genhti SeeSee, CFP®, CAIA
November 5, 2025
US Stock Market: Benefits of a Long-Term View
The US and global stock markets have delivered growth and income to millions of investors worldwide, yet many fail to capture these benefits fully—and some suffer unnecessary losses, stress, and regret. Below, we blend historical perspective with proven strategies to maximize returns while minimizing risk and emotional strain.
Historically, the US stock market—well-represented by the S&P 500 as a proxy for its largest companies—has generated strong long-term performance, averaging 10%+ annually over the past 10, 15, 20, and 30+ years. The chart below shows Average Annual Returns (CAGR), highlighting recent outperformance versus a consistent longer-term average in the 10% range. Yet most investors, left to their own devices, fall far short of these results.
Most Investors Underperform the Funds They Own
Long-term studies, including DALBAR’s QAIB, Vanguard, and Morningstar analyses, consistently show that investors routinely lag the returns of the funds they hold. Why? They trade too frequently, chase hot stocks, enter or exit at the wrong times, or sit in cash waiting for the “perfect” moment. These errors reduce returns by an average of 2%+ per year over decades (see below chart)—but in volatile years, this behavior gap can exceed 5–8% (per DALBAR and Vanguard).
A stark example: In 2024, the S&P 500 returned over 25%, but the average investor captured only 16.5%—a shortfall of 8.5% in a single year.
Most damage occurs during sharp market moves. Fear drives selling in downturns; greed fuels chasing rallies. Overconcentration in ‘hot’ stocks, leverage, risky leveraged ETFs, and overtrading amplify losses. Worse, a single large drawdown triggers a cascade: A 15–20% loss, followed by prolonged cash holdings (due to fear) and continuous underperformance, can slash final wealth by 50–80% or more due to diminished compounding. Remember: A 50% loss requires a 100% gain just to break even. Avoiding big losses—and resisting the urge to cash out in panic—is paramount.
Average Investor Underperforms Indexes, mainly due to investor behavior
(30-Year Study, $100K initial Investment)
Stay the Course: Embrace the Long-Term View
Markets will fluctuate, but investor behavior determines outcomes. Our philosophy emphasizes a disciplined, long-term approach—stoic, rational, and focused on reducing behavioral errors while pursuing clients’ goals.
Our core strategies include:
•Understanding market history
•Diversifying to eliminate single-stock risk
•Minimizing trading
•Avoiding/reducing hot stocks and embracing volatility—after all, the potential for drops is what generates premium returns. Safety comes at the cost of growth.
Market Cycles and Performance
The US stock market cycles through expansion and contraction. Recessions, though infrequent, should be viewed not with fear but as opportunities—especially for those still accumulating wealth. Lower prices mean more shares per dollar.
Staying Vigilant: Navigating Today’s Economic Landscape
History guides us, but the present demands attention. Federal Reserve actions, inflation, interest rates, unemployment, geopolitics, and technological shifts all influence markets. Continuous learning, emotional discipline, and opportunity-seeking remain essential to avoid pitfalls, maximize compounding, and achieve client objectives.
Staying invested is the ultimate edge. Our research confirms it: During last almost 100 years, even the worst 30-year rolling period since 1928 (including the Great Depression) delivered ~8% annualized returns. Every other 30-year window performed better. You may not have 30 years to invest (but most of you do, even if you’re recently retired)—but long-term thinking always wins.
The market will deliver life-changing returns—far beyond your boldest dreams—if you stay patient, master your impulses, or team up with an advisor who won’t let you blink. Most chase short-term sizzle, overestimate the near-term, and wildly underestimate the long-term wealth that funds every goal. Invest like time is your ally, and it will be.