Why It’s Hard to Stay Invested, Even When Markets Are Up
- Holzberg Wealth Management
- 2 days ago
- 9 min read
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Through the close of markets on Monday, the S&P 500 was up 9.16% on the year – a strong showing just six months in. What’s notable this year is the source of that performance. If you strip out the Magnificent 7 companies (Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla), the remaining 493 companies that make up the S&P 500 (let’s call it the S&P 493) are outperforming both the full S&P 500 and the Mag 7 itself, even as the S&P 500 overall climbs over 9%.
Source: @ Exhibit A, FactSet Research Systems Inc., Standard & Poor's | Latest: 2026-06-22 This slide is for informational and illustrative purposes only. The data provided is believed to be accurate, but there is no guarantee of its accuracy, completeness, or timeliness. This is not a recommendation or offer of any financial product. Past performance is not indicative of future results, and investors should consider their own objectives and risk tolerance. Indices, if presented, do not include fees, are unmanaged, and not available for direct investment. Definitions & Methodology: The S&P 500 tracks the performance of 500 large-cap U.S. companies, serving as a benchmark for the U.S. stock market. The index is weighted by market capitalization. The chart displays year-to-date price returns of the S&P 500, S&P 493, and Mag7. The Mag7 refers to Apple, Microsoft, Amazon, NVIDIA, Meta Platforms, Alphabet, and Tesla-seven large-cap stocks often cited for their market leadership. The S&P 493 represents the remaining constituents of the S&P 500 after excluding the Mag7. This breakdown highlights the performance gap between the index's largest names and the broader market. Chart designed by A Wealth of Common Sense.
Moreover, the S&P 500 is a capitalization-weighted index, meaning the percentage each company represents in the index is based on its total market value, giving the largest companies the heaviest influence. This means that the largest companies in the S&P 500 can have disproportionate influence on the index’s direction. If we compare the capitalization-weighted S&P 500 versus an equal-weighted version – where the fund allocates the same percentage to every company in the index, regardless of size, the equal-weighted version is up 10.32% as of the close of markets on Monday.
That is what market broadening looks like – gains and leadership expanding beyond a small handful of dominant stocks like the Magnificent 7.
Now the S&P 500 really only tracks large companies. However, this broadening shows up outside of large companies as well. Several other asset classes are outperforming the S&P 500 in 2026 through the close on Monday:
Emerging Markets: +29.42%
Small Caps: +21.05%
Small Cap Value: +20.16%
Large Cap Value: +15.67%
Mid Caps: +15.17%
Real Estate Investment Trusts (REITs): +12.13%
This broad participation matters because for years, the dominant question from investors was why they shouldn’t simply put everything into the S&P 500, given how concentrated returns had become at the top. This year reminds us why diversification still has a role to play: emerging markets have now outperformed the S&P 500 over the past three years, and small-cap value has outpaced the S&P 500 since the COVID-19 lows.
Why Staying Invested Is Harder Than It Sounds
It’s easy to assume the hard part of investing is holding on during a downturn. But staying invested during a rising market carries its own version of that same test. As legendary investor Howard Marks put it in a 2015 memo, “When you look at the chart for something that’s gone up and to the right for 20 years, think about all the times a holder would have had to convince himself not to sell.”
The bull market that began in 2009 is a useful case study. Along the way, investors had no shortage of reasons to exit, including fears of a double-dip recession, the 2011 U.S. debt downgrade, the Eurozone crisis and Brexit, a lengthy inverted yield curve, the Covid economic shutdown, a multi-decade high in inflation, the Silicon Valley Bank collapse, and two separate tariff outbursts. Despite all of that, the U.S. stock market has returned more than 15% annualized since 2009 – roughly 50% higher than its average of approximately 10% over the last 100 years.
2026 has followed the same pattern. This year alone has brought fears about AI replacing jobs, conflicts involving Venezuela and Iran, renewed inflation worries, and a spike in oil prices, and this year is about half over! Yet the S&P 500 is still up over 9% year-to-date, with stocks up more than 8.55% since the start of the Iran conflict. More recently, tech stocks fell almost 5% in a single day, their worst day in 14 months, reigniting concerns over whether AI is as transformative as markets had priced in. That drop followed a 47% gain over nine weeks, the biggest nine-week run for any sector on record.
Aren’t We Near All-Time Highs?
The instinct to trim stocks because the market feels expensive is one of the most common reasons people sell – but history hasn’t rewarded that instinct. When examining over 1,000 monthly closing levels between 1926 and 2022, the S&P 500 hit new market highs in 30% of the monthly observations. After those highs, the average annualized compound returns ranged from almost 14% one year later to more than 10% over the next five years, with returns positive 81% of the time after one year and 86% of the time after five years. In essence, while it is natural to feel that what goes up must come down (and this may be true in the short term), new highs have historically tended to lead to more new highs.
That also doesn’t mean the path is smooth. Even in positive years, the market typically falls by about 14% at some point, yet annual returns have still been positive in roughly 3 out of 4 years. As the best-selling author Morgan Housel observed, “The market has declined at least 10% on average every 11 months for the past 100 years. So if you go on TV and predict a 10% decline, you should really just say ‘everything is normal.’ ”
This is where having a financial advisor in your corner matters most. It’s not just about talking you out of selling at the wrong time – it’s about the ongoing, disciplined work that happens regardless of what the headlines say. That includes rebalancing your portfolio back to its target allocation as different asset classes grow at different rates, so no single position quietly takes on more risk than you intended. It includes careful, research-driven investment selection designed to spread risk across asset classes rather than concentrating it in whatever has performed best recently. And it includes portfolio construction tailored to you individually – your time horizon, your goals, and your capacity for risk – so that your investment mix is built around your specific situation rather than a one-size-fits-all approach.
A Note for Retirees and Those Approaching Retirement
The temptation to sell can be especially strong for retirees. Once you’re no longer adding to your accounts, a large gain can start to feel like something to protect rather than an opportunity to let ride – captured in the instinct of ‘we’ve already won, why risk giving it back?’ But a retirement that may last 30 or more years still requires decades of growth to stay ahead of inflation, and trimming stocks every time the market looks ‘toppy’ carries its own risk: running short later because you got too conservative too early.
That is exactly the purpose of risk management in portfolio design and keeping a war chest of bonds and cash. Keeping 2-3 years of known spending needs in cash and high-quality bonds means you’re not forced to sell stocks at a bad moment to fund your lifestyle, which allows the rest of your portfolio to stay invested and do its job. In this sense, discipline comes less from willpower and more from a plan built to remove the need for it in the first place.
Bottom Line
Selling is easy to justify when markets fall, and it’s just as easy to justify when they rise. There’s always a reason that makes you feel like you need to do something, and always a headline to make that reason feel smart and well-timed. This year is showing us a market broadening beyond a handful of mega-cap names, with small caps, value, REITs, and emerging markets all picking up the baton. Together, these threads point to the same lesson for long-term investors: the wealth-building outcomes tend to go to those who stay invested through the uncertainty, rather than those who try to time their way around it.
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Monthly Changes in Indices
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Monthly Performance By Sector
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Interest Rates: The Federal Reserve kept interest rates unchanged this month at Chairman Kevin Warsh’s first rate-setting meeting as the central bank’s leader.
Inflation: The Consumer Price Index (CPI) increased 0.5% month-over-month in May. Over the last twelve months, CPI increased 4.2%. Core CPI (which excludes food and energy) increased 0.2% in May compared to April and rose 2.9% compared to a year ago.
Housing: According to the National Association of Realtors, existing home sales increased 3.2% month-over-month in May and also increased 3.2% from one year ago. The median existing-home sales price rose 1.3% from May 2025 to $429,300. Sales of new single-family houses decreased 6.2% in April from March and fell 11.3% from April 2025. The median sales price of new houses sold in April was $422,500 – an 8% increase from a year ago.
Mortgage Rates: As of June 18th, 2026, the weekly average for a 30-year fixed-rate mortgage is 6.47%, above the 52-week average of 6.34% and down 0.34% from a year ago.
Employment: According to the Bureau of Labor Statistics’ Employment Situation Summary, unemployment was unchanged in May at 4.3%. Job gains occurred in leisure and hospitality, local government, and health care.
Consumer Sentiment: The University of Michigan’s Surveys of Consumers ticked up 9.2% in June. Compared to its reading from one year prior, consumer sentiment is down 19.4%. Year-ahead inflation expectations inched down from 4.8% in May to 4.6% in June. Long-run inflation expectations fell back from 3.9% in May to 3.4% in June.
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About the Author
Holzberg Wealth Management is a family-owned and operated financial planning and investment management firm based in Marin County, CA. As your financial advisors, we serve you as a fiduciary and are fee-only, so we never receive commissions of any kind. We help individuals and families like you in the greater San Francisco Bay Area and nationwide with the financial decision-making process to organize, grow, and protect your assets.
** This writing is for informational purposes only. The author and Holzberg Wealth Management do not guarantee or otherwise promise any results that may be obtained from using this report. No reader should make any investment decision without first consulting their financial advisor and conducting their own research and due diligence. These commentaries, analyses, opinions, and recommendations represent the personal and subjective views of the author and do not constitute a recommendation, offer, or solicitation to make any securities transaction. The information provided in this report is obtained from sources that the author believes to be reliable. External links to third parties are being provided for informational purposes only. Holzberg Wealth Management is not affiliated with the third-party websites linked to, unless otherwise explicitly stated, and does not constitute an endorsement or approval by Holzberg Wealth Management of any of the third party’s products, services, or opinions. Past performance is not a guarantee of future results. Indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio. Any charts and graphs provided are hypothetical and for illustrative purposes only, are not indicative of any investment, and assume reinvestment of income and no transaction costs or taxes.
