There’s a reason our instincts push us in this direction. It’s called recency bias — our tendency to give too much weight to what’s happening right now and not enough to the bigger picture. When markets fall, our brains assume they’ll keep falling. But history tells a different story.
Right now, the temptation to react is even stronger. In recent weeks, markets have been rattled by uncertainty surrounding Donald Trump’s return to the global stage. Trade tensions, shifting U.S. policies, and fears of geopolitical instability are adding to investor anxiety — and the headlines are feeding it. But this isn’t the first time we’ve been here, and it won’t be the last.
Portfolios of the past
Let’s rewind to the Global Financial Crisis. Between November 2007 and March 2009, the ASX 200 lost around 55% of its value in what was a significant market crash. But by 2013 — just four years later — the total return index had fully recovered, dividends included.
Fast forward to COVID-19, and we saw the ASX 200 drop nearly 35% in just four weeks. By late 2021, markets were back above pre-pandemic levels. These aren’t outliers — they’re part of a broader pattern: markets fall, and then they recover.
It’s also worth flipping the script on how we think about these declines. A 20% drop in the market feels alarming, but it’s only a paper loss unless you sell. You still own the same number of units or shares. Selling turns temporary red ink into a permanent loss. Long-term investors who ride it out give themselves the chance to recover — and often come out ahead.
Opportunities in a market crash
Even more importantly, the road back is steeper than the fall. When the ASX dropped nearly 35% during COVID-19, it needed to climb by more than 53% just to return to its previous peak. That’s not just a maths lesson — it’s a mindset shift.
Big drops often set the stage for big recoveries. For investors who stayed the course — or even leaned in — that period became an opportunity, not a setback. That’s why downturns and even market crashes aren’t always a red flag; sometimes, they’re a reset.
According to Chant West’s April update, super funds with a high exposure to growth assets dipped 2.5% in March 2025 amid global concerns. But zooming out, the median High Growth fund has still returned an average of 8.2% per annum since 1992 — comfortably beating long-term benchmarks and median funds with a lower exposure to growth assets. Temporary volatility hasn’t changed that.
| Risk Category | Growth Assets (%) | 1 Month (%) | 3 Months (%) | FYTD (%) | 1 Year (%) | 3 Years (% p.a.) | 5 Years (% p.a.) | 7 Years (% p.a.) | 10 Years (% p.a.) | 15 Years (% p.a.) |
|---|---|---|---|---|---|---|---|---|---|---|
| All Growth | 96 – 100 | -3.3 | -1.8 | 6.9 | 6.2 | 7.1 | 12.0 | 8.8 | 8.1 | 8.6 |
| High Growth | 81 – 95 | -2.5 | -1.1 | 6.0 | 5.8 | 6.7 | 10.9 | 8.1 | 7.6 | 8.2 |
| Growth | 61 – 80 | -1.9 | -0.6 | 5.5 | 5.5 | 5.8 | 8.8 | 6.8 | 6.5 | 7.4 |
| Balanced | 41 – 60 | -1.4 | -0.1 | 5.0 | 5.0 | 4.9 | 6.9 | 5.6 | 5.3 | 6.3 |
| Conservative | 21 – 40 | -0.7 | 0.5 | 4.3 | 4.5 | 3.8 | 4.5 | 4.1 | 4.1 | 5.1 |
Source: Chant West
Maybe — but only if your goals, risk tolerance, or life circumstances have changed. Reacting purely to the headlines rarely ends well. Instead:
- Revisit your goals — are they still right for you?
- Recheck your time horizon — is this money for 3 years or 30?
- Talk to your adviser — a second perspective can make all the difference.
Markets recover. Portfolios bounce back. And if yours was built with care and intention, there’s a good chance it’s doing exactly what it’s supposed to — even if it doesn’t feel like it right now.
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