On Thursday, the Nasdaq Composite fell 5.5%, its worst day since April 2025. If you watched your portfolio shrink, you're not alone. Days like that are hard to sit through, whatever the size of your account.
It helps to look back at the last time this happened.
Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
In early April 2025, the Nasdaq fell nearly 6% on back-to-back days as new tariffs rattled markets. Then, on April 9, it jumped 12%, its second-best day on record. By late June, the Nasdaq and the S&P 500 had both closed at new record highs.
Anyone who sold in fear on April 4 likely missed that rebound. And no one could have known it would start three trading days later.
That pattern is common. In its latest Guide to Retirement, J.P. Morgan Asset Management studied the 20 years through 2025. It found that 6 of the market's 10 best days came within two weeks of its 10 worst days. A $10,000 investment in the S&P 500 that stayed put grew to about $80,619. Miss just the 10 best days, and it ended up around $35,866, less than half as much.
Past patterns don't guarantee a quick rebound this time. Some declines last longer. But selling after a day like Thursday means betting you can get back in before the best days arrive. History says that's very hard to do.
If you plan to keep adding money to stocks for years, falling prices aren't all bad news. They mean your next dollars buy more.
Say you invest $500 a month in a stock. At $100 a share, that buys five shares. At $80, it buys six and a quarter. The business is the same. You just get more of it for your money.
That holds whether you're adding $50 a month or $5,000. As long as you're buying more often than selling, lower prices can help you over time. You don't need to pick the bottom or hunt for bargains. Just keep your regular contributions going.
A down market also offers a practical opportunity. Say some stocks in your taxable brokerage account are worth less than you paid. Selling them locks in a loss, and that loss can offset capital gains elsewhere. If your losses exceed your gains, you can generally deduct up to $3,000 of the difference from ordinary income each year and carry the rest forward.
Two cautions:
Inside retirement accounts, there's no tax to worry about when you trade. So this is a good time to check whether your mix of investments still aligns with your plan.
Thursday hurt, and the swings might not be over. But the best days often come soon after the worst. Stay invested, keep adding to businesses you believe in, and use this drop to get ahead on year-end taxes.
Fool on!
Most investors think they missed the AI boat because they didn't buy Nvidia in 2005.
But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout, a massive technology build-out that Google’s CEO says could be more profound than fire or electricity.
While everyone watches the chip designers, one "backbone" company provides the critical technology that Nvidia and AMD literally cannot function without. We’ve detailed this under-the-radar player in our new AI Playbook.
Continue »
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