By Wes Crill, Ph.D., Dimensional Fund Advisors
The past five U.S. stock market sessions have turned up the volatility to 11.¹ The decline of –10.5% over April 3–4 was the worst two-day stretch for the S&P 500 Index since March 12, 2020. Then, on April 9, the index gained 9.5%, the third-largest one-day return since 1987.
During these sorts of ups and downs, it’s helpful to zoom out and view market returns over the longer term. Trailing one-, three-, and five-year returns were in line with historical ranges, with or without the rally on April 9. And the effect of a single day’s return becomes muted when expanding the measurement period. For example, while the one-year return swung from –2.9% to 6.2% after April 9, the five-year return budged much less, from 14.0% to 16.4%.
This is not meant to trivialize recent market volatility. Rather, it’s a reminder that when it comes to stocks, taking the long view may help investors avoid reacting to short-term market movements. The nine-percentage-point difference in one-year return between April 8 and 9 illustrates the danger of panicking and divesting just one day early.
Exhibit 1
Trailing Periods Versus Historical Percentiles for the S&P 500 Index
April 10, 1995–April 9, 2025
Past performance is not a guarantee of future results.
Footnotes
If this reference is unfamiliar, you need to see the movie This Is Spinal Tap immediately.
Disclosures
The information in this material is intended for the recipient’s background information and use only. It is provided in good faith and without any warranty or representation as to accuracy or completeness. Information and opinions presented in this material have been obtained or derived from sources believed by Dimensional to be reliable, and Dimensional has reasonable grounds to believe that all factual information herein is true as at the date of this material. It does not constitute investment advice, a recommendation, or an offer of any services or products for sale and is not intended to provide a sufficient basis on which to make an investment decision. Before acting on any information in this document, you should consider whether it is appropriate for your particular circumstances and, if appropriate, seek professional advice. It is the responsibility of any persons wishing to make a purchase to inform themselves of and observe all applicable laws and regulations. Unauthorized reproduction or transmission of this material is strictly prohibited. Dimensional accepts no responsibility for loss arising from the use of the information contained herein.
This material is not directed at any person in any jurisdiction where the availability of this material is prohibited or would subject Dimensional or its products or services to any registration, licensing, or other such legal requirements within the jurisdiction.
“Dimensional” refers to the Dimensional separate but affiliated entities generally, rather than to one particular entity. These entities are Dimensional Fund Advisors LP, Dimensional Fund Advisors Ltd., Dimensional Ireland Limited, DFA Australia Limited, Dimensional Fund Advisors Canada ULC, Dimensional Fund Advisors Pte. Ltd., Dimensional Japan Ltd., and Dimensional Hong Kong Limited. Dimensional Hong Kong Limited is licensed by the Securities and Futures Commission to conduct Type 1 (dealing in securities) regulated activities only and does not provide asset management services.
RISKS
Investments involve risks. The investment return and principal value of an investment may fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original value. Past performance is not a guarantee of future results. There is no guarantee strategies will be successful.
UNITED STATES
Dimensional Fund Advisors LP is an investment advisor registered with the Securities and Exchange Commission. Investment products: • Not FDIC Insured • Not Bank Guaranteed • May Lose Value Dimensional Fund Advisors does not have any bank affiliates.