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The stock market in 2025 was a roller coaster for investors, but it was a fruitful year for those who remained invested.
The S&P 500 experienced record highs and a drop, and while it felt rocky along the way, it finished the year up more than 16%. In real time, we saw the benefits of avoiding emotion and sticking to a long-term investment strategy.
As we enter 2026, there are lessons from last year that could help dictate your investment decisions. Here are three things you should keep in mind:
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1. Stick to the long-term strategy
As financial advisers, we’re constantly preaching that time in the market is more important than timing the market. In real time, the stock market showed us why.
Taking a closer look at last April’s Liberation Day tariffs, they caused the S&P 500 to plunge 10.5% for one of the worst two-day stretches in its history, while the NASDAQ hit bear market territory and the Dow Jones Index closed in correction territory.
The market quickly recovered, and by May 2, the S&P 500 had recovered all of its losses from early April. If you sold your investments in the middle of the collapse, you would’ve missed out on the gains that followed.
This trend stretches beyond 2025: The S&P 500 has lost value throughout the course of a year just four times since 2003, with an average annual return of 10.25%.
These emotions can lead to poor decisions that don’t take into account the full picture. It’s important to take a long-term approach to your investments. Historically, riding out the storm has proven to be a successful strategy.
2. Diversify your assets
The stock market has historically produced long-term value, but, as we’ve discussed, that typically comes with volatility along the way. Assets in related industries tend to react to one another, and if one stock in the industry drops, the others may follow suit.
For example, AI stocks are some of the most valuable stocks on the market, but being too heavily invested in them leaves you susceptible to significant losses if the market collapses. This market has been rocky at points throughout 2025, owing to fears of an AI bubble, most recently in November.
Diversification is all about risk management and it can be a more successful strategy in the long run. Consider using a wide range of asset classes to further diversify your investment strategy.
It can also be helpful to spread out your stocks between multiple industries, from health care and technology to energy and consumer staples.
3. Work with a professional
Long-term investment strategies are important for setting your financial future up for success, but they can be difficult to execute. That’s where a financial adviser can come into the picture.
A professional can remove the emotional bias from your decision-making and help your investments to be properly allocated and aligned with your risk tolerance, whether you are a conservative, moderate or aggressive investor.
This is especially important as you near retirement and begin relying on your 401(k) or IRA funds.
Building and sticking to a long-term investment strategy is easier when you’re working with a team that can provide advice and behavioral discipline in their decisions.
Looking ahead
As we look ahead to 2026, the same fears that impacted the 2025 stock market remain. Inflation remains stubbornly high, tariffs remain in effect, and fears of an AI stock bubble continue.
These factors will likely cause volatility throughout the year, and new economic fears could arise and send shockwaves throughout the market, but it’s important to avoid emotional decisions.
Looking specifically at the AI bubble, some investors are concerned that these stocks are overvalued and will soon drop in value. Yet, others estimate that some of these stocks could increase by as much as 34% in 2026.
We don’t know what will happen in 2026, but selling these stocks for fear of a bubble popping could cause you to miss out on potential significant gains.
The data doesn’t lie — long-term investing can be a successful strategy. Rather than worry about bubbles, focus on the time in the market and how your investment portfolio fits into your retirement picture.
As you evaluate your strategy in 2026, I encourage you to build a long-term plan without emotion and consider working with a professional to help navigate your investment decisions.
