Why the S&P 500’s Recent Volatility is a Golden Opportunity for Expatriates (And How to Retire Comfortably)

Imagine watching your investments swing wildly over two weeks – one day up, the next day down. It’s a rollercoaster that would unnerve anyone. In early March 2025, for example, the S&P 500 briefly turned a ~4% year-to-date gain into a –4% loss , all in a matter of days. Such short-term volatility can tempt even seasoned investors to retreat to the sidelines. But here’s the big takeaway: if history is any guide, those who stay invested through the bumps have been richly rewarded over time. In this article, we’ll explore the S&P 500’s performance over the past century, see why big downturns often precede big rebounds, and understand how long-term investors (including expats new to the market) can benefit by staying the course instead of trying to time each twist and turn.

A Century of Growth: S&P 500 Historical Performance

It’s easy to fixate on the daily news, but zooming out to the 100-year view of the U.S. stock market is truly eye-opening. The S&P 500 – an index of 500 of the largest U.S. companies – has weathered world wars, recessions, oil shocks, and financial crises. Yet, over the long haul, it has marched relentlessly upward. On average, the S&P 500 has delivered about a 10% annual return for investors over many decades  . That means, despite all the ups and downs, money invested in America’s top companies has grown at a robust pace. For instance, a famous analysis shows that $100 invested around 1900 would be worth over $14 million today with dividends reinvested  – a testament to the power of compounding over generations (even after accounting for inflation, that’s about $385,000 in today’s purchasing power ).

Data from officialdata.org

Looking back, every decade had its challenges. The Great Depression of the 1930s saw stocks plunge nearly 80%. The 1970s brought high inflation and stagnant markets. The Dot-Com crash in the early 2000s cut the S&P 500 in half, and the 2008 financial crisis did nearly the same. Yet, after each of these gut-wrenching downturns, the market found a bottom and climbed to new heights. In fact, what’s remarkable is how resilience wins out: from the post-World War II boom of the 1950s to today’s tech-driven economy, the S&P 500 has turned temporary setbacks into long-term gains  . If you had invested decades ago and simply held on, chances are you’d be sitting on significant growth today. As one analysis puts it, after **31 years (1993–2023) that included multiple recessions and crashes, the S&P 500 still delivered about 10% annualized returns, aligning with its historical average . The key lesson from a century of data is clear: time in the market beats timing the market.

Always a reason not to invest

Riding the Rollercoaster: Why Volatility Often Precedes a Comeback

If short-term market swings make you uneasy, you’re not alone. Sudden drops can be scary, and it’s natural to think about hitting the eject button when things look bad. However, history shows that today’s volatility can set the stage for tomorrow’s growth. In many cases, the stock market’s best days follow closely on the heels of its worst days .

Think about this: during the 2008 crisis, on October 9, the S&P 500 plunged 7.3% (one of its worst days ever); just **four trading days later, it skyrocketed 11% in a single day – one of the biggest daily gains in history. Similarly, during the 2020 pandemic crash, some of the largest single-day jumps happened amid the darkest weeks of the sell-off. The pattern isn’t a fluke. Huge rebounds often occur when pessimism is at its peak, meaning if you panic and sell, you’re likely to miss the recovery.

Why is missing a rebound such a big deal? Because a few big up days account for a huge portion of long-term returns. One study found that if you tried to sidestep downturns and in the process missed just the 5 best days each year from 1966–2001, your returns would have been disastrously lower. In that analysis, a $1,000 investment shrank to just $150 (only 15% of the original value) for the market-timer, whereas it would have grown to about $11,700 for the steadfast investor who stayed fully invested . That’s the cost of missing those crucial bounce-back days.

Staying invested for the long term always outperforms timing the market

The message is simple: volatility is normal, and it’s the price we pay for the higher returns that stocks historically provide. Instead of seeing turbulence as a trigger to exit, savvy investors view it as a reason to stay the course (or even a chance to buy at lower prices if they can). As difficult as it feels in the moment, “don’t panic” is often the best strategy. Markets have a way of recovering, and those who abandon ship rarely re-board in time to catch the rebound. By staying invested through the choppy waters, you ensure you’re there for the eventual sunny days that follow.

The 10-Year Test: Long-Term Investing Always Wins (Almost)

How can we be so confident about the long run? One big reason is the historical record of 10-year (and longer) investment returns. When you look at the S&P 500’s history, the vast majority of 10-year periods have been positive for investors. In fact, data over the last ~85 years shows that 94% of the time, a 10-year investment in the U.S. stock market made money . There have been only a couple of exceptions to that rule – notably, if you invested right before the severe downturn of the mid-1970s or just before the 2008 Great Recession, you had a flat or slightly down decade . But even those rare cases eventually saw strong recoveries in the years that followed.

To put it another way, if you pick any 11-year span in recent history, odds are you ended up with a gain. A recent published on Bratu Capital analysis of S&P 500 returns from 1993 to 2023 found that investments held for 11+ years were consistently positive . Despite short-term setbacks, no 11-year period lost money in that 31-year sample – underscoring the adage that time in the market beats timing the market. Even 5-year stretches have a strong track record: while shorter periods can swing to losses, historically the five-year rolling returns of the S&P 500 have more often than not been in the green. And once you stretch out to 20-year or 30-year horizons, the S&P 500 has never delivered a negative return over such long periods in modern history (assuming dividends reinvested).

Investments held for 11+ years were consistently positive

What about the average returns? Over every 10+ year period, the S&P’s annualized returns have typically clustered around that ~10% long-run average, even if any single year might be +20% one year or –10% the next. By staying invested for a decade or more, you allow the ups and downs to even out. The short-term noise fades, and the underlying growth of the economy shines through in your results. Long-term investors have been consistently rewarded, whereas those who jump in and out risk turning temporary declines into permanent losses by selling at the wrong time.

For expatriate investors or those new to stock market terminology, here’s a simple way to think about it: investing in the S&P 500 is like planting a tree. It won’t shoot up overnight, and it will definitely sway in the wind (sometimes quite violently!), but given enough years, it will grow taller and stronger, season after season. Patience isn’t just a virtue in this case – it’s profitable.

The S&P 500 Today: Allocation, Risks, and Opportunities

Now, let’s bring it back to the present. What does the current S&P 500 look like, and what should investors be mindful of? As of 2025, the index – which represents roughly 80% of all U.S. public companies by value – is dominated by a few key sectors and stocks. Technology is king: by early 2025, about 30–33% of the S&P 500’s value is concentrated in information technology companies . In fact, just 10 mega-cap stocks (think household names like Apple, Microsoft, and their peers) make up roughly one-third of the entire index’s worth . This is even higher concentration than we saw during the dot-com boom in 2000, when the top stocks were around 27% of the index . For investors, this concentration is a double-edged sword: if those big tech names continue to do well, they can pull the whole index up; but if they stumble, the index can feel an outsize impact.

S&P 500 - Sector breakdown

Beyond tech, the index is diversified across industries – including finance, healthcare, consumer goods, industrials, energy, and more – but not all sectors are equal. For example, sectors like energy, utilities, and real estate combined are only about 7–8% of the index . That means booming oil prices or a real estate surge won’t move the S&P 500’s needle as much as, say, a big day for tech stocks or banks. As an investor, it’s useful to know that the S&P 500’s performance is currently driven largely by big U.S. tech-oriented firms, with other sectors playing a smaller role.

Key risks right now: High inflation and rising interest rates (as seen in recent years) can create short-term pressure on stocks. For instance, when interest rates rise, some investors shift money to bonds, which can lead to temporary stock outflows. Geopolitical tensions or economic slowdowns in major countries can also spark volatility – we’ve witnessed supply chain disruptions and war impacts ripple into the markets. Valuations are another consideration: after the strong rally of 2023 (when the S&P 500 jumped over 20% ), stock prices in some sectors became elevated. Any hint of companies not meeting growth expectations can cause swift pullbacks (as we’ve seen in the first quarter of 2025 with the index’s dip).

However, with risk comes opportunity. Periodic pullbacks and corrections (typically defined as a drop of 10% or more from recent highs) can be healthy for the market, allowing prices to cool down and potentially giving long-term investors a chance to buy shares at a relative discount. For those with a sound plan, a market dip is not so much a disaster as it is a sale on stocks. Moreover, other sectors beyond tech might present opportunities. For instance, financial stocks and industrial companies currently have more modest valuations (price-to-earnings ratios) and could see growth if economic conditions stay robust . Dividend-paying stocks in sectors like healthcare or consumer staples offer steady income, which can cushion portfolios during volatile stretches. And if you’re globally diversified or considering international markets, note that the U.S. isn’t the only game in town – though it has been one of the top performers historically.

For expats or those not deeply versed in investing, here’s the bottom line on the current market: ensure you’re diversified and know your risk tolerance. The S&P 500 itself gives you broad exposure to the U.S. economy, but remember that it’s a bit top-heavy in tech right now. Balance that knowledge with your own goals. If you’re investing for the long run (10+ years), the day-to-day swings or which sector is hot today matters less than the fact that you’re participating in a market that has grown wealth over time. As history shows, staying invested through various market conditions – booming or volatile – has been a winning strategy more often than not.

Conclusion: Stay Invested, Stay Confident – Your Future Self Will Thank You

Volatility is part and parcel of investing. The last two weeks’ wild swings in the S&P 500 are a reminder of that, but they are far from unusual in the grand scheme of things. If you take away one lesson from the S&P 500’s century-long journey, let it be this: don’t let short-term turbulence derail your long-term goals. The investors who come out ahead are typically those who stick to a plan, remain invested, and even continue adding to their investments regularly (for example, through a monthly savings plan) regardless of market conditions. This approach, often called dollar-cost averaging, ensures you buy more shares when prices are low and fewer when they’re high – a simple technique that takes the guesswork out of timing and can reduce stress during volatile periods .

As we’ve seen, timing the market (trying to jump in and out to avoid losses) is extremely tough – even professionals rarely get it right consistently. On the flip side, time in the market – allowing decades of growth, dividends, and compounding to work for you – has historically been a much surer path to wealth. The S&P 500’s long-term upward trajectory is evidence of the resilience of the economy and the power of innovation and business growth. By investing in it, you’re effectively betting on human progress and enterprise. And if the past 100 years are any indication, that’s been a very good bet to make.

Ready to put these insights into action for your own financial journey? At Bratu Capital, we specialize in helping investors (including expatriates navigating unfamiliar markets) craft long-term, resilient investment strategies. Remember, you don’t have to ride the market rollercoaster alone. Our team can help you build a diversified portfolio and a plan that suits your goals and risk comfort. Book a complimentary consultation with us to discuss how to secure your financial future despite market ups and downs, or subscribe to our newsletter for regular tips and market insights. Stay invested, stay informed, and let the power of long-term investing work for you!