The panel argues that investment performance isn't determined only by what you own, but by how you react when markets fall. Fear can turn temporary volatility into permanent losses when investors abandon a long-term strategy and sell during sharp declines. Since 1980, the S&P 500's average maximum intra-year decline has been about 14.2%. Yet J.P. Morgan's current data show the index still produced positive calendar-year returns in 35 of those 46 years, illustrating how common significant temporary declines can be. Investor behavior can materially affect realized returns. DALBAR tracks how buying, selling and switching decisions influence investor results. In 2024, its average equity investor gained 16.54% while the S&P 500 returned 25.02%, although that gap narrowed substantially in 2025. Liquidity cuts both ways. Being able to sell investments quickly can be valuable, but it also makes acting on fear remarkably easy. FINRA warns that investors who sell when stocks fall can miss potential gains if markets subsequently recover.
