Financial Roller Coasters
Over Memorial Day weekend, the Yakel family took a quick trip up to Cedar Point as we have two teenage boys who are roller coaster fanatics. I walked Ben and Ethan to the park for early entry at 8:30AM…and then came back to collect them at park close after 10PM (I had given up trying to keep up with them around dinner time!). I give them credit for their passion to make the most of the day—Ethan reported 22,000 steps…which is super impressive with much of his day in a line or on a ride. 😊
At one point during the day, Ben turned to me and said, “You know what would make a great ride? A coaster that is based on the stock market—since it seems to drop and then climb back all the time.”
He’s not wrong…it’s been a bit of a wild ride in the stock market this year. Nauseating for folks with weaker stomachs or a healthy dose of self-preservation. 😊
As evidence…
$2.5 trillion of market value was erased on April 3rd when tariffs were announced:
Source: https://www.ft.com/content/f820e191-348c-4298-b15f-49600be843ce
Which led to one of the largest stock market declines this century from April 3rd – April 7th:
Source: https://www.newsweek.com/how-trump-tariff-shock-compares-great-depression-2056411#slideshow/2622524
Source: https://www.cnbc.com/2025/04/09/stock-market-posts-third-biggest-gain-in-post-wwii-history-on-trumps-tariff-about-face.html
Which was then followed by one of the largest one day gains ever in the market on April 9th:
And kicked off one of the fastest rebounds in history from April 9th to May 12th:
Source: https://www.linkedin.com/posts/edward-yardeni_recalibrating-our-forecasts-as-stock-market-activity-7327880612839669760-L5xY/
Just like Ben and Ethan reporting headaches after 12 hours of roller coasters, it is no surprise that investors have whiplash.
This extreme volatility plays into some of our worst biases. Our human brains take shortcuts often to help us process information faster—these are called cognitive biases. There are over 180 known and named biases. Visual Capitalist attempted to organize them onto one chart:
Source: https://www.visualcapitalist.com/every-single-cognitive-bias/
As investors, there are about a dozen biases that frequently cause bad decision making in volatile market times—here are the top five:
Source: https://www.visualcapitalist.com/five-cognitive-biases-hurt-investors/
Recognizing these biases can help to ride out the waves of emotion in the stock market roller coaster:
Source: https://www.visualcapitalist.com/sp/roller-coaster-of-emotional-investing
Having a trusted advisor also can help to sooth tension and anxiety when market volatility, emotions, and biases collide. Several studies have attempted to quality the value of an advisor in coaching an investor through the emotional investing cycle. The Vanguard study is one most frequently referenced.
Vanguard found that the performance difference in portfolios between investors with a trusted advisor versus working alone was between 1%- 2% annual return difference (they averaged it out to 1.5% in the behavioral coaching category below):
Source: https://www.vanguard.ca/content/dam/intl/americas/canada/en/documents/gas/advisors-alpha-infographic.pdf
So, just like Ben and Ethan at Cedar Point—riding roller coasters is a lot more fun (palatable?) when you have a trusted friend along for the ride too. It’s way more fun than being in the “Single Rider” line all alone. 😊
