Fears are Misplaced...
November 22, 2025
Last week the markets were volatile, experiencing the biggest drawdown in nearly 6 months on Tuesday yet finishing the week slightly positive overall. The respite was brief however. Selling continued into this week, highlighted (lowlighted?) by Thursday’s epic turnaround when, following market darling Nvidia’s strong earnings report on Wednesday evening, the market roared as it opened and then collapsed – the S&P 500 rising almost 2% before ending the day down 1.5%. Excitement over AI gave way to fears of excessive capital spending. Rate cut expectations declined in the face of various Fed Governor comments. Sentiment, formerly extremely positive and overly optimistic, had changed…suddenly fears of a bubble and investor pessimism had asserted control.
Emotions are powerful forces. While theoretically data driven, the investment world is often greatly impacted by them, reacting to excessive euphoria on the upside and exaggerated fear and pessimism during sudden declines. As the markets continue to experience more dramatic volatility, please try to keep your rational, emotion-controlling hats on. While the shift in sentiment happened quickly this time (as it often does), the market was overdue for a meaningful pullback. It had gone an usually long time without a 5% correction. That may be a kind of wonky technical data point so, more simply, consider this - even after all the headline-grabbing recent declines, the Dow and the S&P 500 are 8.4% and 11.9% ahead, respectively, for the year.
Remain calm when your November statements arrive in a few days and there are real losses. If you need to, give yourself a minute to mourn how much wealthier you were 30 days ago. Then get over it, lose that thinking. As hockey star Wayne Gretsky famously remarked: ‘I skate to where the puck is going to be, not where it’s been.’ Similarly, investors need to focus on what the future holds, not what the past produced. Recognize that high volatility, rising investor fear, quick sentiment reversals…these are conditions that produce emotional reactions in investors and often some great investment opportunities.
There may be a chance to buy stocks you ‘missed’ at a discount - Nvidia, Microsoft, Broadcom, Visa are all off 15% from their highs, Oracle 40%, Meta (Facebook) 25%. Similarly on the consumer side Uber is off 15%, Chipotle 55%, Decker (Uggs and Hoka) 60%, Starbucks 25%, Gap 17%. And that darling of the speculating masses, Bitcoin, is down 35%. This is not to recommend any of the above names, simply to illustrate that many stocks have come down significantly from their highs, some despite great results and strong guidance. If you don’t have a list of stocks you are interested in, make one and then check them out…you might be surprised to find that some will have declined to attractive entry points.
Similarly, if you let the September/October AI-driven market euphoria influence you and you purchased bitcoin ETF’s when the token was trading at $120K, or you bought the shares of quantum computing companies with little or no revenue and multi-billion dollar valuations, or you succumbed to FOMO and bought Oracle at $300/share or higher before you realized that the company would go from cash generating to borrowing billions, don’t mourn your losses or sit there hoping for a recovery. Prices may even decline a bit more – take your losses, and if after 30 days you still believe in these ideas, you can buy again at the much lower prices while the booked losses can be used to offset gains that are there to be taken in your portfolio.
Please also remember the inevitable impact of recency bias…the latest market activity has a much stronger influence, both up and down. That is why a broader perspective and a longer-term focus are so important. I have had several conversations with investors this week who were very pessimistic. All were surprised when told that market gains for the year were still existent. Earnings reports were mostly positive, there is some undercurrent of instability in the labor market yet the Fed can cut rates to deal with that, there was froth in the markets but it wasn’t widespread. The most recent data show the economy continues to grow…we are not in a recession.
Call your investment advisor, encourage him/her to think similarly. Ask what they are thinking, what stocks they’re watching and considering buying now that there has been a retrenching. Engage them so they understand that you are paying attention and looking ahead for smart strategies, not dwelling on your November paper losses. If you are nervous, tell them, talk with them. It is their job to not just invest for you but to be an investment counsel, even an educator, especially during volatile times.
Keep your rational investor hat on, leave your emotions to be put to better use elsewhere, get a better perspective. Look at where your portfolio was three years ago…you are almost certainly much better off than you were then. Don’t be upset by what was and is no longer, it’s a waste of time and energy. Recognize the recent declines for what they were – overdue and not at all unusual. If you made some mistakes – and we all do – recognize them, undo them and move on. Be reasonable, rational, strategic, effective. The United States has a dynamic economy that creates tremendous value…stay invested and participate in the gains.