The ASX hit an all-time closing high on Thursday.
You might have seen that news. Or not.
See when the market does well, it might make the headline, or a sub-heading, of those 'Markets Live'-style blogs on the major mastheads.
Which is in stark contrast to the large and loud headlines, when the market falls:
(The subeditors really need to find something other than 'wiped off', huh?)
We know why, of course.
Bad news sells.
Fear sells.
We react more viscerally to losses than we do to gains.
None of that is new. But it's worth pointing out, again, I think.
And it's worth, now, thinking back to early April 2025, from whence those headlines come.
You might remember it was in the midst of the early tariff dramas.
Donald Trump was threatening to whack a tariff on everything that wasn't nailed down (and much that actually was), and China threatened to retaliate.
The stock market, well, freaked out.
Which isn't a new thing.
'The stock market hates uncertainty' is one of those cliches that rings very true.
When traders aren't sure what to think, or what's coming next, they sell.
Now, fast forward 4.5 months.
That $160bn 'wiped off'?
In its aftermath, the S&P/ASX 200 Index (ASX: XJO) had fallen to 7,343 points.
And since then?
Well, as of Friday afternoon, that same index was at 8,967.
That's a… 22.1% increase!
Am I cherry-picking the bottom?
You bet. To make a very important point.
See… there were traders and investors selling on that day. They were getting out of Dodge.
Maybe they thought they could see an ugly future? Maybe they couldn't stand the pain? Maybe they were going to get back in when the coast was clear?
Newsflash: The coast still isn't clear.
Here's the other thing. Let's say they decided to sit out a month while they waited for things to settle?
Seems sensible, right?
Except that, over the month from the April lows, the ASX 200 gained 11.4%. That's more than half of the increase between April 7 and today.
Ah, but it's easy to say that now, right?
At the time it was scary… and anything could have happened, right?
Two things.
First, I wrote in this space on that very day, April 7.
In that article, I said:
"None of those things was enough to stop progress. To stop improvement. To stop long term success.
That's why I invest.
That's why I remain invested.
That's why I'll be buying more shares, soon.
Because I think the future is just as bright as it's ever been.
Not in the absence of black clouds, but despite those clouds."
and:
"We've been here before. No, not exactly here. But essentially the same place.
Fear. Uncertainty. Doubt.
And we've gone on to better things, long-term, despite that.
Will it be different this time?
Maybe. But I doubt it.
Because we've got 100-plus years of history to show us."
And the second thing?
I've been writing similar sentiments in this space for well over a decade now.
Every time, it felt scary. Every time, there have been very good reasons to worry about the economy or the market, or both.
Every time, the market has bounced back to new highs – the latest of which was this week.
My guess?
We'll have more big falls in future.
And we'll set new record highs, too.
A promise? No. But that's my best guess.
Because that's what the past tells us.
Lest this seem like a victory lap, though, I want to reinforce two things:
One: falls happen and the market has always recovered.
Two: highs happen, and the market has always had falls.
The same thing? Yes, but from two different perspectives.
I want you to reflect on the last 4.5 months next time the market has a big drop. I want you to keep the faith, if you have a well-chosen, sensibly diversified portfolio of quality companies.
But I also want to remind you that, while we're all feeling good about that high, there will be falls ahead. The time to mentally and emotionally (and financially!) prepare for that is now: while the air is clear and fear isn't clouding your thoughts.
Sure, enjoy the gains, but be ready for the losses that will come, at some point. And make your peace with them, now.
I'm pretty sure we'll have more 'April 7's. Just as I'm pretty sure that the ASX will set more record highs, both before, and after, the next big drop.
The lesson, I hope, is clear:
Work hard.
Save diligently.
Invest regularly.
Choose your companies wisely.
Diversify your portfolio sensibly.
Ride the waves dispassionately.
Because the ASX has never yet failed to regain, then surpass, a previous high.
If that remains true, and I expect it will, time is the investor's best friend.
All we have to do is stay the course, and let time do its thing.
…
Or, for a giggle on a Sunday – and if The Force is more compelling than I am – tell 'em, Yoda (with thanks to ChatGPT):
Clear, the lesson is, I hope.
Work hard, you must.
Save diligently, you should.
Invest, regularly you will.
Wisely, choose your companies.
Sensibly, diversify your portfolio.
Dispassionately, ride the waves.
Failed to regain and surpass a high, the ASX has not.
True, if that remains — and expect it, I do — time, the investor's best friend is.
Do its thing, let time.
Stay the course, we must.
On Fool, we must! Hmmm?
