The S&P 500 swung violently last week, climbing 1.6 percent the day after the midterm election—its strongest day since August—before plunging 4.4 percent the next day, the worst single-day drop since April 2025. The Nasdaq Composite fell 5.5 percent on that same day, after gaining 1.4 percent previously. The VIX spiked to 28, the highest level since April 2025.
Here's what matters: investors who panic-sold during this whipsaw destroyed real wealth. Between 2006 and 2025, missing the S&P 500's 10 best days reduced annualized returns from 11 percent to 6.6 percent—a 440-basis-point drag. J.P. Morgan analysts found that six of those 10 best days occurred within two weeks of the 10 worst days. Five happened the day immediately after a crash.
For equity portfolios, this is the core lesson: volatility is the price of equity returns. Treasury bonds offer safety but low yields. The accumulation strategy that works is systematic—deploying cash into index funds at fixed intervals regardless of price. Selling into weakness is a wealth-destruction trade. The data says so.
