Historical Volatility: The Price of Admission

Historical Volatility: The Price of Admission

If you study market history, one thing becomes very clear: volatility isn’t a bug—it’s a feature.

Take the S&P 500. Over decades, it has delivered strong long-term returns, but rarely in a straight line. In fact, the market experiences a pullback of 10% or more almost every year on average. Yet despite these frequent drops, the long-term trajectory remains upward.

That’s where investors get themselves into trouble.

They expect smooth returns, but markets don’t work that way. Volatility creates fear, and fear leads to poor decisions—selling low, holding excess cash, and waiting for “certainty” that never comes. Ironically, the very periods that feel the worst are often when the best long-term opportunities are created.

Historical volatility teaches us an important lesson: short-term discomfort is the price you pay for long-term growth.

Because in the end, volatility doesn’t destroy wealth—behavior does.

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Colin Symons, CIO Lloyd Financial Group

Retail Sales were strong, at 0.6% m/m vs. exp. 0.5%, while Core was 0.5% vs. exp. 0.3%. Everything looked good except furniture.

ADP Employment was 62K vs. exp. 40K. Private employment continues to hold up.

ISM Manufacturing was also good at 52.5 vs. exp. 52.5. Prices rose, which isn’t a huge surprise given it’s March data.

The Trump administration called for simpler, but likely higher, steel and aluminum tariffs while also looking to raise tariff on certain medicines to 100%, as they push for domestic manufacturing.

On the bright side, Trump’s speech last night said the operation in Iran is winding down. On the downside, the US plans to hit Iran hard over the next 2-3 weeks, barring a diplomatic solution. To what extent is this real and to what extent is it negotiation? Also on the plus side, it seems US involvement should end within three weeks, which gives us a date to hold on to. This sent WTI oil to week highs, but interestingly, Brent oil didn’t get up there on the news.

If stocks end down today, that will be a record ten down Thursdays in a row. Are we escalating to de-escalate, yet again?

Jobless claims and balance of trade, today.

What does it all mean? Are we escalating to de-escalate yet again?

Nothing is much fun about these setups.

The problem is that the second war problems look like they may resolve, they jump.

In this case, we seemed a few days into pricing in a longer-term war and now it’s getting walked back. That’s going to hurt a lot of people.

One reason to have expected upside is we just finished the ‘bad’ side of the JPM collar and were getting to the good side. Plus, CTAs were already negatively positioned and pension plans are underweight.

All that said, one poor headline can take this all down.

Everything is starting to work for bulls, now, with VIX, SOFR, and energy all relaxing.

In general, rates really hit high growth and momentum. I’d expect that to reverse as the market relaxes.

I expect bulls are going to win this, and it’s very likely the bottom is in. Will the market provide a pullback to buy into?

Don’t leave your financial future up to chance. Let’s build a plan that gives you confidence today and peace of mind for tomorrow. Click here to schedule a meeting — I’m here to help you take the next step toward financial freedom.

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