Investing in the stock market is a long-term commitment. While short-term fluctuations and volatility are inevitable, the overall trajectory of the market tends to be upward. By taking a long-term perspective, investors can ride out temporary downturns. Long-term investing allows for the opportunity to capitalize on the power of time in building wealth, preparing you for future gains and success.
Long-term investing offers many benefits, including tax advantages, compounded returns, and the ability to disregard short-term market fluctuations, which can cause stress and lead to panic selling. These advantages obviously work optimally when investors pick the right stocks to put their hard-earned money in. And with hundreds of choices, it can be challenging to separate those that are worth serious consideration and those that aren't.
If you're heavily invested in tech stocks, you've surely heard concerns that we may be approaching (or in) a bubble. Similar to the dot-com bubble in the late 1990s and the housing bubble in the early 2000s, tech stocks are on fire, and some bears believe they are overheated today. Is that true? I think the concern is overstated, but it's also important to acknowledge that markets sometimes drop. Corrections are nothing new and are, in fact, part of the heartbeat of the stock market.
Tune into your favorite financial television channel these days, and you're bound to get at least a handful of reasons to sell amid the recent pick-up in volatility. With Goldman Sachs (NYSE:GS) recently noting the possibility that most of the AI boom may already be priced into the stock market, there seems to be serious concern for the magnitude of returns moving forward, especially if there's more AI froth to take off the top before the year comes to a close.
The Vanguard S&P 500 ETF is often considered an appropriate investment for savers who want instant diversification in their portfolios. VOO aims to match the performance of the S&P 500 index itself, which consists of the 500 largest publicly traded companies by market capitalization. To put it another way, the companies VOO invests in are large, established businesses. And because there are so many of them, VOO can be a good investment for people who are skittish about researching stocks individually.
When market volatility shakes our confidence and headlines scream uncertainty, I remind people that the real risk isn't the ups and downs-it's our reaction to them. In 2025, amid escalating global trade tensions, steep tariffs, stubborn inflation and a government shutdown, we've witnessed wave after wave of turbulence. Yet from decades in financial services, I've learned a simple truth: Your biggest risk isn't market volatility - it's how you respond to it. Rather than be reactive and try to time the market, it's important to stay the course.
Several investors have built strategies focused on long-term structural trends, accepting near-term volatility in exchange for exposure to multi-decade opportunities. These individuals identify fundamental shifts in demographics, technology, or economic organization that create persistent tailwinds for specific sectors or geographies. This approach requires conviction to maintain positions through market cycles and patience to allow theses to play out over extended periods. Investors pursuing long-term structural strategies often accept illiquidity, concentrate portfolios more than conventional wisdom suggests, and communicate perspectives that diverge from consensus views.
CEO Larry Fink said the global market currently holds more than $4.5 trillion in digital wallets, spanning crypto, stablecoins, and tokenized assets. "A lot of that money is outside the United States," Fink said on CNBC earlier today, emphasizing the opportunity for the firm to reach new investors through digital channels. Fink said tokenization could allow investors who are entering markets through crypto to access more traditional long-term products, such as retirement funds.
1. Start simple - you don't need to be a trader "You can make it extremely complicated if you're a trader, but you don't have to be," Ellard-King said. Rather than spending hours glued to screens and options, he recommended mainly investing your money in index funds that track the broader market. "Just let the smartest companies in the world do their thing," he said.
Indeed, valuations are quite high on select AI stocks that have gained high double-digit percentage points so far this year. And the S&P 500 is certainly skewing towards the higher end of the valuation range. But above-average valuation metrics do not necessarily mean that the stock market is about to blow up in devastating fashion, with tech stocks imploding as they did just a quarter of a century ago.
