“Rick, the market has been up for too long. We are due for a massive downturn.”
“This AI bubble is going to burst any second.”
“We’re headed for World War III.”
“A crash is coming because [fill in the blank].”
If you are feeling this way, I have some good news for you: This fear is exactly what keeps the market healthy.
There is an old adage on Wall Street from the legendary investor Sir John Templeton:
“Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.”
Right now, we are squarely in the Pessimish / Skepticism phase.
Markets don’t crash when everyone is scared. Markets crash when everyone is euphoric. Markets crash when your cab driver is giving you stock tips. Markets crash when everyone is convinced that “stocks only go up.”
When people are worried, they are cautious. They hold extra cash. They hedge their bets. This caution acts like a buffer.
It is only when fear is completely removed—when investors believe there is zero risk—that the market becomes fragile. That is when we get a bubble. That is when we get a crash.
So, the fact that you are worried about AI, the too-long-bull-run, or the geopolitical landscape? That’s actually a bullish signal.
But let’s look at the data.
You are worried about a downturn. Let me be the first to tell you: A downturn is coming.
It is virtually guaranteed. But not because of AI or WW3. It’s coming because that is just what markets do.
Here are the historical averages for the S&P 500:
5% “Pullbacks”: These happen about 3 to 4 times per year. (We are essentially due for one every quarter).
10% “Corrections”: These happen about once per year on average.
20% “Bear Markets”: These happen every 3 to 5 years. (The last one was 2022.)
If we get a 10% drop next month, it doesn’t mean the world is ending. It doesn’t mean the AI bubble burst.
It means it’s a Tuesday.
Volatility is the price of admission for stock market returns. If you want the gains, you have to be willing to endure the scary headlines.
Your Move:
Don’t get out for the “storm to pass.” The world never looks safe. There is always a war, a bubble, or an election.
If you wait for the fear to go away, you will be waiting on the sidelines while the market climbs the wall without you.
Stay disciplined. And frankly… stay a little bit worried. It’s good for you.
#stayinvested