I know many of you are feeling more anxious lately, and it’s understandable. Headlines can grab our attention and make it tempting to react emotionally. But investing based on fear or excitement rarely leads to good results. 

Instead of trying to predict the future, I find it more helpful to look at how investors are actually behaving. Back in late 2021, we saw signs that the riskiest parts of the market were weakening, even as the indexes climbed. For some reason, investors were becoming more selective. Now we know, it was because they saw higher inflation and interest rates on the horizon. By spring 2022, more than half of U.S. stocks had fallen 20% or more from their highs. Over these months, we dialed back risk in client portfolios as the market’s health continued to deteriorate. 

Today, the evidence looks very different. As of August 27, the number of stocks still 20% or more off their highs is at the lowest point since February, and more stocks are close to their highs than at any time since late 2024. That shows investors still have a healthy risk appetite, which provides a solid foundation for markets. 

Historically, August and September can be choppy months, and we may see a pullback. I expect any short-term drop to be a buying opportunity, not the start of a larger downturn. 

The intermediate-term outlook can always change, but these shifts usually take weeks or months to develop. For now, the evidence supports staying invested and resisting emotional decisions.