Investing in stocks can feel daunting, especially when headlines are dominated by economic uncertainty, geopolitical conflicts or market downturns. However, history has repeatedly shown that stocks, as ownership interests in businesses, have the power to overcome obstacles and reward patient investors over time. Next to human beings, there is arguably no more dynamic or adaptable organism on the planet than a well-run business. Rather than focus on their long-term economic resiliency, we tend to focus on stocks’ negative features, such as their periodic volatility or occasional earnings disappointments. Doing so, however, is like having Michael Jordan on your team and not playing him because occasionally his locker was messy. It’s because the negative story sells these days. But it’s the wrong story to focus on, at least when it comes to stocks and building wealth.
The phrase “wall of worry” has been around for a long time. In terms of investing, it refers to the recurring fears that challenge markets—whether inflation, recessions, wars or technological disruptions. The wall of worry may win the battle for short periods of time, but it doesn’t win the war of wealth creation over the long haul.
Consider the Great Depression, World War II, the stagflation crisis of the 1970s, the dot-com crash and the 2008 financial crisis—each event caused significant volatility, but long-term investors who remained steadfast were ultimately rewarded. When it comes to periodic bear markets, outlined in the following chart, our Ancora colleague Jeff van Fossen likes to say, “More money has been lost from trying to avoid bear markets than from bear markets themselves.” This is evident as stocks trade near all-time highs today. Innovation and adaptation have steamrolled all the wall of worry items we can identify to date. Yet, as we speak, we are collectively consumed with identifying and analyzing the next batch of wall of worry items and issues on the horizon that, “maybe this time,” could derail stocks’ long-standing track record of wealth creation and resilience.
Once again, this resilience is rooted in the adaptability of businesses. Companies continually innovate, improve efficiency and create products and services that enhance lives. Think of how giants like Apple, Microsoft, Amazon, Costco, JPMorgan Chase, Berkshire Hathaway and others have revolutionized communication, computing, retailing and financial services. Even during downturns, well-run businesses pivot and evolve, positioning themselves for future growth and a stronger future.
The S&P 500 Index, used as a broad measure of the market, has delivered an average annual return of about 10% over the past century, despite numerous setbacks. While short-term volatility is inevitable, long-term investors who focus on the power of innovation, productivity and human ingenuity are consistently rewarded. If you want to know the real secret to building wealth, it is captured in the simple phrase from another Ancora colleague, Michael Santelli, who shares in our internal research meetings that we should encourage clients to save like a pessimist but invest like an optimist.
In closing, stocks are not just numbers on a screen—they represent dynamic enterprises that drive progress. By embracing a long-term perspective, investors can harness this power to build wealth and participate in the world’s continuous evolution. Nobody knows exactly what 2025 will bring, but if we keep our attention on the long-term resiliency of businesses, and the stocks we own as a proxy for them, we should do well on our investment journey over time.