Don’t Let Stock Market Whiplash Distract You

By Sallie Krawcheck

Let’s start with the good news: The stock market ended 2021 on a really strong note. In fact, the S&P 500, the NASDAQ, and the DJIA — that’s all three major stock indexes — were up by nearly 20%. (The S&P 500 had 70 (!) record-high closes.) 

We also saw more than 1,000 companies go public — that's double the number from 2020 — and raise a collective $315.6 billion, the most since 1995. Ellevest Chief Investment Officer Dr. Sylvia Kwan summed it up best in her recent outlook on the 2022 markets: “It was a banner year for the stock market.”

Now for the … let’s just call it more sobering news. The first week of trading in 2022 was a roller coaster. Most notably, tech stocks took a hit as bond prices tumbled. That’s in part because it looks like the Federal Reserve may hike interest rates as soon as March in order to help ease inflation

Higher interest rates can cause stocks to dip for various reasons. One of them is that when interest rates are higher, everyone — investors, corporations, your grandmother — tends to spend less and borrow less. When borrowing is more expensive for companies — even high-flying tech companies — that can make investors nervous about their future profitability. 

Add to that the fact that the omicron variant is wreaking havoc on our already sputtering economy, and the result is a rocky start to the year. 

So if you’re feeling like you want to jump off the investing ship, I get it.

Or maybe you’re one of the people hearing the “experts” predicting a big market drop and then an end-of-year rally. So you’re wondering if you should buy more stocks in an attempt to “buy low and sell high.” 

What’s a long-term investor, like yourself, supposed to do with all this FOMO out there in the ether, making you feel like you need to do something

First of all, to level-set, it’s worth noting that historically the stock market has been less risky than many of us tend to think it’s been. Not risk-free by any means at all, but less risky than you might think if you invested for the long-term. Yes, the stock market goes up and down, but it’s been around an upward trend: In fact, equity markets have averaged annual returns of nearly 10% since 1928

So what do you do when those trading urges hit? How about “do nothing”? Well, not nothing: Keep calm and keep investing for the long term — or in other words, set it and forget it. Keep those automated deposits going. (75% of Ellevest members who invest with us have recurring deposits, which goes to show that so many of you are doing it right.) And when you get a raise, look to increase those deposits. 

Also remember that investing shouldn’t be just about the stock market — diversification should be at the center of your investment strategy. That’s why at Ellevest, we build well-diversified investment portfolios: They include US stocks, but also non-US stocks, bonds, and in some cases, funds that invest in real estate. They’re built to be more resilient to weather — what Dr. Kwan calls the “known unknowns” and “unknown unknowns,” ie whatever the hell comes our way in 2022.

In fact, we believe investing in a diversified portfolio for the long-term is one of the most powerful wins you can give yourself — in 2022, yes, but in 2042, too. It can feel challenging to keep doing the same thing when everything else is constantly changing around us, and we feel like we have no control. But following the historical data and staying the course is the part that can be in our control. 

Here’s to more investing in yourself (and Future You) in 2022. 

Sallie Krawcheck Signature


As of January 11, 2022. Defined as Ellevest members who have funded an investment account and have active current deposits.

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Sallie Krawcheck

Sallie Krawcheck is the Founder & CEO of Ellevest.