MML #065: Winters Are Short. Summers Are Long.

Someone stopped me at a social gathering last week and said, "You must be swamped right now — all those nervous clients blowing up your phone."

Not really. At least not for that reason.

I don’t mean to dismiss what's happening in the markets. But what I am conveying is that a well-built plan doesn't require a fire drill every time volatility shows up.

Markets fall. That's part of the deal.

J.P. Morgan recently summed up market behavior with a line that I think outlines market sentiment perfectly: winters are short, but summers are long. It's a simple way of saying that markets spend more time going up than down — and when they do fall, the dips tend to be shorter than the recoveries that follow.

The chart below puts numbers behind that idea. Since 1980, the S&P 500 has experienced an average intra-year drop of 14.2%. This comes by surprise to most as we tend to forget the dips. That's just the normal cost of investing. And in 35 of those 46 years — despite the turbulence — annual returns finished positive.

Take a look:

The reason for the volatility is always different. Trade policy, inflation, a pandemic, a banking scare. Each one feels unique. But the historical pattern remains remarkably consistent.

So what are we actually doing right now with clients?

Honestly? We're deep into review season. March and April are when we meet with the majority of our clients, and that's by design — a lot of financial planning decisions converge around the April 15th tax deadline. So we're busy, but not for the reason most people assume.

For clients we've worked with for a while, our review conversations are mostly an alignment check. We walk through the three-bucket distribution strategy — short, medium, and long-term — and the guardrails spending approach. For most people, the conclusion is the same: your plan is on track.

And for some clients, a down market is actually an opportunity. Take Roth conversions:

Say you have $50,000 in a traditional IRA. The market pulls back and that balance drops to $40,000. You convert it to a Roth today. At a 35% tax bracket, you owe $14,000 — paid from outside the account.

That $40,000 is now growing tax-free.

At 7% average annual growth over 20 years, it becomes roughly $155,000. You keep all of it. If you had left that original $50,000 in the traditional IRA, it also grows — to about $193,000. But at 35%, you owe $68,000 in taxes on the way out. You walk away with around $125,000.

Same market. Same timeline. $155,000 versus $125,000.

Turning market lemons into lemonade.. And that's just one example.

A note on what we promise — and what we don't.

I'll never tell you I can steer around volatility. No one can. What I can do is build a portfolio designed to weather it, and make sure your broader plan doesn't depend on the market being calm at any given moment.

That's the difference between an investment account and a financial plan. One fluctuates. The other is built to absorb it.

If any of this resonates with your own situation, I'd love to talk it through. Grab some time on my calendar and we'll go from there.

Winters are short. Summers are long. The plan is built for both.

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