The S&P 500 was slightly up last week, although we expect continued volatility and pressure on stock prices as consumer spending declines. But before you panic, realize that, while 2025 has been negative year-to-date, the S&P 500 is up over 8% from a year ago. While the 24-hour news cycle, social media, and being in the DC bubble make things seem overwhelming, the market is, well, normal.
If you are still concerned, one of the best strategies is dollar-cost averaging. That’s when you invest a set amount of money on a regular basis. A great example of this is contributing to your 401(k) or TSP; each paycheck, you invest the same amount, regardless of what the market is doing.
In bull, or rising markets, you buy fewer shares. And in bear, or down markets, you buy more shares. Over the course of time, your average cost per share is lower than the average price of the stock over the same period – because you bought more shares when the stock was on sale. The Wall Street Journal recently released a study[1] showing that portfolios using a dollar cost averaging strategy outperformed by approximately 0.40% annually. In rising markets, or highly volatile ones, the strategy does even better.
The take-away is that, even in down markets, investing regularly is beneficial. If you are concerned, when you receive your next statement, look at the number of shares you own and not just the dollar amount. Even if your account balance has declined, you own more stock. When the market recovers, you own more shares that will benefit from the recovery.
Your action item this week is to call your HVAC company and schedule your spring maintenance. And while you’re at it, change the filters in your air conditioner.
In April, we’re hosting a two-part webinar series to help federal employees update their resumes and LinkedIn profiles. Check out our website at covingtonalsina.com, or our Facebook page, for more information and to see our other upcoming educational events.
CovingtonAlsina is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.
[1] Does Dollar Cost Averaging Work? Here’s Wha the Numbers Say by Derek Horstmeyer, Wall Street Journal, 3/9/25