The stock market is currently experiencing significant volatility.
Daily updates surrounding President Trump’s policies and their implications for global trade relationships have led to an epic panic-driven sell-off. While uncertainty looms, caution is advised against getting too caught up in day-to-day news stories.
During Donald Trump’s first term as president, between Jan. 20, 2017, and Jan. 20, 2021, the S&P 500 gained 69%, while the Nasdaq Composite soared by 142%.
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Though investors enjoyed healthy returns, uncertainty around inflation and borrowing costs affected economic activity. Consequently, many voters opted for a different direction in the most recent election cycle, and on November 5, 2024, Trump was re-elected as president.
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The reaction in the capital markets following Trump’s victory in November sent a clear message – investors were excited again.
Between Nov. 5, 2024, and Dec. 31, 2024, the S&P 500 gained as much as 5%, while the Nasdaq rose as high as 9%.
However, these gains had substantially retreated by the end of December due to concerns frequently mentioned during his campaign. Emotions play a significant role in exploring these trends in how the stock market operates. Investors often focus too much on the recent past, making it difficult to build wealth.
VIX dropped to 30 for its fourth decline in five days, continuing its retreat from last week’s spike pic.twitter.com/KMC5T41U7T
— Liz Ann Sonders (@LizAnnSonders) April 16, 2025
Navigating Trump-era market swings
Taking a broad perspective and analyzing long-term performance can be beneficial. Over the last 35 years, major indexes such as the S&P 500, Nasdaq Composite, Russell 2000, and Dow Jones Industrial Average have shown significant long-term returns, even amid periods of economic turbulence. Each recession in the U.S. has been followed by a breaking of previous records, signaling that buying stocks during downturns and holding them long-term has historically paid off.
While history suggests that investing during market weakness tends to yield positive results, the consideration becomes what to invest in right now. This largely depends on your risk appetite. For growth-oriented investors, buying the dip in specific stocks could be wise in the long run.
For more insulated opportunities, spreading capital across exchange-traded funds (ETFs) that track major indexes is also a prudent strategy. Some choices include:
– Vanguard S&P 500 ETF
– SPDR S&P 500 ETF Trust
– Invesco QQQ Trust
– iShares Russell 2000 ETF
– SPDR Dow Jones Industrial Average ETF Trust
The big-picture idea is that investing during periods of chaos, uncertainty, and volatility tends to be a good strategy in the long run, despite the challenges of dealing with near-term headwinds. Though the short term can be tumultuous, keeping a long-term perspective and focusing on historical trends can guide investors through the uncertainty.
By spreading investments across diverse options and considering risk appetite, investors can navigate the current economic climate while positioning themselves for potential future gains.
Image Credits: Photo by Aidan Hancock on Unsplash
