By Duncan Lamont, CFA, Head of Strategic Research at Schroders.

You might have forgotten but global markets fell by almost 20% in April following "Liberation Day" – before rebounding to all-time highs. As we enter a renewed period of jitters, this long-term data provides a broader perspective.

At one stage in April, the global stock market (MSCI ACWI index) had slumped nearly 20% in dollar and sterling terms, slightly more in euro terms. This followed the initial announcement of US tariffs on what the Trump administration called "Liberation Day".

Amidst tariff wars and geopolitical turmoil, many battered and bruised investors were tempted to sell. As we enter a renewed period of market jitters, many will be feeling nervous once again.

But what happened after the April sell-off serves as a powerful reminder of the risks investors face if they try to time the market. The stock market quickly recovered its losses before continuing to rally to new all-time highs. By late October, it was up 36% in dollar terms from the lows. Anyone who sold will be ruing that decision.

Now, at the time of writing in late November, once again, the market is showing signs of unease. The market’s fear gauge, the Vix index, has risen and share prices have fallen back

Before continuing, it is worth putting this latest bout of stress into context. The stock market isn’t down even 5% from its latest all-time high, but that doesn’t change the nerves many people are already feeling.

We can’t alter the emotional response but what we can do is provide some objective, data-driven, analysis which may help you shift from a knee-jerk reaction to a more logical and reasoned one.

1: 10%+ falls happen in more years than not, and 20% falls happen roughly every four years

This year’s volatility has felt scary, but it’s worth putting that in a longer-term context. It is nothing out of the ordinary. The market has fallen by 10% or more in 31 of the past 54 years (including 2025). And it has fallen by 20% or more in 13 of these years.

Biggest stock market falls in each of the past 54 calendar years, MSCI World (USD)

Past performance is not a guide to the future and may not be repeated

_{Source: LSEG DataStream, MSCI, and Schroders. Data to 18 November 2025 for MSCI World price index in USD terms.}

The risk of short-term loss is the price of entry for the long-term returns that the stock market has delivered.

2: Stock market investing is very risky in the short run but less so in the long run – unlike cash

While short-term declines are stress-inducing, for most investors, what matters more should be the risk of not achieving their long-term financial goals. These vary but, as a minimum, most investors at least want their money to keep pace with inflation.

This is where stocks have historically shone, whereas seemingly safer investments like cash have struggled. In the short-run, cash and stocks have a similar track record of beating inflation. Both have managed it around 60% of the time, failing to do so a sizable 40% of the time.

But the longer the investment horizon, the more likely it has been for stocks to outperform inflation, while cash’s odds have stayed low. As a result you can argue that cash has been riskier than stock market investing when it comes to beating inflation in the long-run.

Percentage of time periods where US stocks and cash have beaten inflation 1926-2024

Past performance is not a guide to the future and may not be repeated.

_{Source: Stocks represented by Ibbotson® SBBI® US Large-Cap Stocks, Cash by Ibbotson® US (30-day) Treasury Bills. Data to December 2024. Morningstar Direct, accessed via CFA Institute and Schroders.}

3: Being spooked by volatility could cost you in the long run

The Vix index, a measure of the amount of volatility investors expect from the S&P 500 index over the next 30 days, is often called the market’s "fear gauge".

As recently as 27 October it was giving the all-clear signal on a level of 15, below the historical average of 19. But it shot up as high as 28 on Friday 21 November.

The question for investors is whether they should take a heightened fear gauge like this as a sign to sell their stocks. Historically, the answer has been a resounding no.

Growth of $100 fully invested in stocks, vs switch to cash when VIX is high

Past performance is not a guide to the future and may not be repeated.

^{Note: Levels in excess of 33.0 represent the top 5% of experience for the VIX. Portfolio is rebalanced on a daily basis, depending on the level of the VIX at the previous close. Equity index is S&P 500, cash is 30-day cash. Data to 30 September 2025. Figures do not take account of any costs, including transaction costs. Source: CBOE, LSEG Datastream, Schroders}

4: Don’t fret about the market being near all-time highs

Investing 101 is that you should buy low and sell high. It is therefore perfectly reasonable for investors to feel concerned if the market is at or near an all-time high. But should they?

The conclusion from our analysis of stock market returns since 1926 is unequivocal: no.

On average, 12-month returns following the point at which an all-time high is hit have been better than at other times: 10.4% ahead of inflation compared with 8.8% when the market wasn’t at a high. Returns on a two or three-year horizon have been similar, regardless of whether the market was at an all-time high or not.

Returns have been higher if you invested when the stock market was at an all-time high than when it wasn’t

Average inflation-adjusted returns for US large cap equities, per year

Past performance is not a guide to the future and may not be repeated.

^{Source: Stocks represented by Ibbotson® SBBI® US Large-Cap Stocks, Cash by Ibbotson® US (30-day) Treasury Bills. Data to 30 September 2025. Morningstar Direct, accessed via CFA institute and Schroders.}

While this initially feels counterintuitive, it makes sense when you reflect that the market has gone up over time, and so has been at an all-time high on a regular basis. Of the 1,197 months since January 1926, the market was at an all-time high in 368 of them – or 31% of the time.

We can also look at the long-term cost of being scared off if the market hits an all-time high. The table below shows how $100 invested in the US stock market would have grown over various time horizons to 30 September 2025, in inflation-adjusted terms. It also shows what would have happened if, instead of staying invested, you switched out of stocks and into cash whenever the market was at an all-time high, and you went back into stocks whenever it wasn’t. This would have cost you big time. And that’s before we even take account of transaction costs.

Selling stocks whenever the market was at an all-time high would have destroyed significant wealth in the long-run

Growth of $100, inflation-adjusted terms

Past performance is not a guide to the future and may not be repeated.

^{Data January 1926-September 2025. Switching strategy moves into cash for the next month whenever the previous month-end was an all-time high, and is invested in stocks whenever it wasn’t. Results exclude transaction costs. Stocks represented by Ibbotson® SBBI® US Large-Cap Stocks, Cash by Ibbotson® US (30-day) Treasury Bills. Source: Morningstar Direct, accessed via CFA Institute and Schroders.}

There may be valid reasons to worry about stocks but the market being at all-time high should not be one of them.

5: There is always a reason to worry but, in the long-run, stocks have beaten bonds which have beaten cash

While the past is not necessarily a guide to the future, history suggests that those who responded to market risk with knee-jerk reactions often missed out. Increasing risks around the world – from geopolitical instability to trade uncertainty – can make investors uneasy, but for long-term investors, staying calm and disciplined, and sticking to your plan, is often the most effective approach.

US asset returns in excess of inflation 1926-2024

Past performance is not a guide to the future and may not be repeated.

^{Data to December 2024. 1926-2023: stocks represented by Ibbotson® SBBI® US Large-Cap Stocks, Corporate bonds by Ibbotson® SBBI® US Long-term Corporate Bonds, Government bonds by Ibbotson® SBBI® US Long-term Government Bonds, and Cash by Ibbotson® US (30-day) Treasury Bills. For 2024, an alternative index has had to be used for government bonds as Morningstar has halted data updates and production for the SBBI Indices. The ICE BofA 10+ Year US Treasury Index has been chosen for consistency. Source: Morningstar Direct, accessed via CFA institute, LSEG Datastream, ICE Data Indices, and Schroders}