Declines in April and Continued Market Volatility

April Declines

News headlines described the April returns of the S&P 500 as "the worst April returns in 30 years." Although that may be correct, in the past 30 years, we have seen months with greater declines greater than April 2022. And let's not forget that over the past 30 years the S&P 500 has returned over 1700% and $10,000 would have grown to over $185,000.¹

If I was invested 100% in the S&P 500, my portfolio would have dropped just about 9% in April. But my portfolio and our clients portfolios are not invested 100% in the S&P 500. At Prato Capital, our client's portfolios (mine included) are a balanced and diversified mix of stocks and bonds. Balanced meaning that our clients are not 100% invested in stocks. The bond portion of the portfolio provides a balance to the volatility the stock market sometimes sees. Diversified means that the stock portion of the portfolio is not all in the S&P 500. It includes small and mid- cap stocks, and international and emerging market stocks. So, although my portfolio declined in April, it was not near as much as the S&P 500 decline.

For me, what matters much more than the short term monthly and even quarterly S&P 500 returns is any impact on my financial plan over the rest of my life as I approach retirement. The same should be true for everyone with a plan. Short-term stock market results make good headlines, but every long-term investor should be looking at the impact of these returns over their entire lifetime.

Just as we plan on the growth of stocks over the long-term to help grow portfolios to support the financial plan over the years, we also expect and plan for market declines to happen. It is built into every financial plan we offer to our clients. And the overall impact of April's returns on my Financial Life Plan was at most very minimal because declines are expected.

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