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Don’t Let Market Volatility Throw You Off Course

A churning market can become a breeding ground for bad decisions if investors let their emotions get the better of them. The COVID crash in early 2020—when the market fell by more than 30% in a matter of weeks—is one such example. A big drop like that often elicits panic selling, but fleeing the market when times get tough could make it harder to reach your goals.

The Schwab Center for Financial Research found that an investor who started 2020 with a $100,000 portfolio and missed the 10 best days of stock market performance would have ended the year with $51,000 less than if she’d stayed invested the entire time—despite the 30% drop.1 Indeed, five of the best days occurred alongside five of the worst—meaning those who sold to avoid further losses missed out on a meaningful recovery.

Figures like these are a good reminder that sticking to your plan, even when things look grim, is often the best course of action. Crises pass and turbulent markets eventually stabilize—and those who remain steadfastly invested are often the better for it.


Charles R. Schwab

Founder & Chairman

1Schwab Center for Financial Research with data from Morningstar. The year began on the first trading day in January and ended on the last trading day of December, and daily total returns were used. Returns assume reinvestment of dividends. Fees and expenses would lower returns. When out of the market, cash was not invested. Market returns are represented by the S&P 500 Index®, an index of widely traded stocks. Top days are defined as the best-performing days of the S&P 500 during 2020. Past performance is no guarantee of future results.

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Important Disclosures:

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

Investing involves risk, including loss of principal.         

Indexes are unmanaged, do not incur management fees, costs, and expenses, and cannot be invested in directly.

The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.


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