May 2025 Newsletter

Lately, it feels like the market can’t decide whether the world is ending or if we’re heading into an AI-driven golden age where robots handle everything while we enjoy the ride. Somewhere between those two extremes is likely the reality…

The truth is, market volatility isn’t a flaw. It’s part of how investing works. When the headlines get loud and uncertainty rises, it’s tempting to think you can step aside and avoid the worst of it. But history shows us something very different.

Over the past 25 years, a $1,000 investment in the S&P 500 would have grown to $4,413 if you simply stayed fully invested.

· Miss the 10 best days? Your return would have been cut by more than half.

· Miss the 30 best days? Your return would have been negative.

If you’re thinking about going to cash during tough times, it really comes down to one question: Are you confident you know exactly what the stock market will do tomorrow? Or next week? Or next month? If so, let me know — I might have a corner office and a fancy title waiting for you… along with a crystal ball we’ve been meaning to put to good use.

Jokes aside, here’s what might surprise you: many of the market’s best days actually happen in the middle of the worst ones. Some of the strongest rallies show up right after big drops. So if you head to the sidelines during a downturn, you might miss the recovery — and those missed days can really add up.

Markets don’t send out an “all clear” signal to let you know when it’s safe to get back in. The best opportunities often show up when it feels the most uncomfortable. That’s why trying to time the market isn’t just difficult — it’s dangerous for your long-term results.

So, what can you do instead? Stick to a well-thought-out plan. Focus on your longer-term time horizon rather than the next news headline. Accept that volatility is part of the journey, not a sign that something is broken.

At its core, investing is an act of optimism — a belief that over time, businesses will grow, innovation will continue, and value will be created. There will always be setbacks along the way.

Thank you for reading and for letting me be part of your financial journey.

Volatility Is Normal — Even When It Feels Anything But

If you’ve been investing for any length of time, you already know: markets don’t move in straight lines. They twist, turn, dip, and surge — sometimes all in the same day...

The chart below is a powerful reminder that volatility isn’t an exception to the rule. It is the rule. It shows the annual returns of the S&P 500 since 1980, alongside the largest intra-year decline each year. And what it makes very clear is this: even in the years when the market finished strong, there were often significant drops along the way.

On average, the market experiences a 14% pullback at some point during the year. Yet despite these dips, the S&P 500 still posted a positive return in roughly 75% of those years. Big pullbacks and big gains often happen together.

2020 is a perfect example — the S&P 500 dropped 34% during the early months of the pandemic... and still finished the year up 16%.

Temporary declines are not a sign that something is broken. They are a normal, expected part of the investing journey. Markets are designed to test your patience, especially in the short term. But those who stay disciplined, even when it’s uncomfortable, are often the ones who are rewarded over time.

What does this mean for you?

It means your portfolio should expect volatility — not try to avoid it. Short-term pullbacks, even the scary ones, don't automatically mean you need to change your plan. In fact, some of the biggest investment mistakes happen when people react emotionally, selling during downturns or moving to the sidelines just when opportunities start to reappear.

When you zoom out, the noise tends to fade. The bumps and corrections that feel so disruptive in the moment usually blend into a much smoother path when you view them over years and decades. Staying disciplined during volatile periods isn’t easy — but it’s one of the biggest differences between successful and unsuccessful investors. 

Building a Truly Diversified Portfolio

Let’s get one thing out of the way: over the long run, stocks have been an incredible engine for growth. The S&P 500 has averaged about 12% annual return — a stat that’s hard to ignore. The catch is that the growth doesn’t come in a straight line.

We’ve all seen it — 2008, 2022, and parts of 2025 so far — markets can go from euphoria to anxiety in a heartbeat. That’s why real diversification goes deeper than just owning different US based stocks. It means intentionally mixing in investments that don’t move in lockstep — this could include:

Bonds - Examples: U.S. Treasuries, municipal bonds, corporate bonds
Bonds tend to act as the adult in the room when stocks are being dramatic. They generate income and often provide stability when markets turn volatile. When stocks drop, bonds can help cushion the fall — and give you dry powder for future opportunities.

International & Emerging Market Stocks- Examples: Developed markets (like Europe and Japan), emerging markets (like India and Brazil)
U.S. stocks won’t outperform forever. Other parts of the world go through their own growth cycles, and international markets often shine when the U.S. takes a breather. They also tend to respond differently to currency shifts, inflation, and geopolitical changes.

Real Estate - Examples: Public REITs, private real estate funds, physical rental properties 
Real estate tends to move to its own rhythm. Whether it’s a publicly traded REIT or a duplex you own down the street, real estate can generate consistent income, offer long-term appreciation, and serve as a natural hedge against inflation — especially when tied to rent-producing properties.

Precious Metals (Gold & Silver) - Examples: Physical bullion or ETFs like GLD or SLV

Gold and silver have been stores of value for thousands of years — and they can still play a role in modern portfolios. They don’t produce income, but they do tend to shine when inflation spikes, currencies weaken, or geopolitical uncertainty rises.

Private Markets - Examples: Private equity funds, venture capital, private credit
Private markets are less liquid and harder to access — but they often offer different return sources than public stocks and bonds. While not right for everyone, they can enhance long-term returns and reduce correlation when used appropriately.

Cash & Cash Equivalents - Examples: Money market funds, high-yield savings accounts, T-bills
Not glamorous — but incredibly powerful. Cash gives you flexibility. It helps you avoid being a forced seller during market drops and lets you buy when everyone else is panicking. That’s often where real opportunity lives.

Each one plays a different role. Some create income. Some offer long-term upside. Others are there simply to help you sleep at night when the markets are having a meltdown.

The goal isn’t to squeeze every last drop of return out of your portfolio. It’s to build something resilient — something that works in good times and holds up in bad. A well-diversified portfolio can give you something most investors don’t have: dry powder. That flexibility to make moves after a drop, not during the panic. That’s when real opportunities show up — but only if you’re in a position to take advantage of them.

Too often, investors build portfolios for one market environment — usually the one we’ve just been through. But when things change, they’re stuck reacting. A better approach is to diversify across return sources, income streams, liquidity timelines, and risk profiles. That way, if one part of your portfolio takes a hit, you’re not forced to sell. In fact, you might be able to buy.

This matters more when your net worth starts climbing. Concentration might get you ahead in the short term, but over time, it’s diversification that helps you stay there. The right mix gives you staying power — and staying power is what actually builds long-term wealth.

If you’re building real wealth — and especially if your income and equity are already tied up in a single industry or company — then diversification is no longer optional. It’s a form of protection, a source of opportunity, and the foundation of any plan that’s built to last.

Using Dollar-Cost Averaging to Stay Disciplined

Even when you understand the importance of staying invested, it’s completely normal to feel nervous about when and how to put new money to work — especially in volatile markets. That’s where a strategy called dollar-cost averaging (DCA) comes in.

Dollar-cost averaging is the simple practice of investing a fixed amount of money at regular intervals, regardless of what the market is doing. Instead of trying to pick the perfect time to buy, you spread your purchases out over time.

This approach helps take emotion out of the equation. It creates a system where you stay invested and keep moving forward, even when headlines are discouraging or market swings make it tempting to second-guess your plan.

While dollar-cost averaging doesn’t protect you from losses in a declining market, it does have two major advantages. First, it builds a healthy investment habit that keeps you focused on the long term rather than getting caught up in short-term noise. Second, it helps manage risk by reducing the impact of investing a large lump sum right before a market drop.

The goal of investing isn't to find the perfect moment. It’s to be consistent — to keep showing up for your future, even when the market feels unpredictable.

In times like these, dollar-cost averaging is one of the simplest, smartest tools we have to stay disciplined and continue building toward long-term goals.

What Does This Mean for You?
If you have cash you're planning to invest — whether it’s from savings, a bonus, or another source — you don’t have to stress about finding the "perfect" time to put it to work. By using dollar-cost averaging, you can invest steadily, reduce emotional decision-making, and avoid the risks of trying to time the market.

The chart below shows that while the outcomes of investing all at once versus dollar-cost averaging can be similar over long periods, dollar-cost averaging generally leads to a smoother, less volatile experience.

Why a Thoughtful Investment Review Matters

It’s easy to think of reviewing your investments as simply checking how your portfolio performed over the past year. But a true investment review goes much deeper — and it’s one of the most important habits for long-term financial success.

The checklist included here isn't just about fine-tuning numbers or analyzing performance. It’s meant to help you step back and ask the bigger, more strategic questions that really shape your future.

‘Are your investments still aligned with your goals and any life changes?’ Because life evolves — and your financial plan should evolve with it.

‘Is your portfolio truly diversified and tax-efficient?’ Because returns are only part of the story — what you actually keep after taxes, fees, and mistakes matters just as much.

‘Are you managing risk thoughtfully, not reactively?’ Because while volatility is normal, reacting emotionally can undo years of careful planning.

‘And are you taking advantage of strategies that can quietly strengthen your results over time?’ Small adjustments, like asset location or regular rebalancing, often make a bigger difference than chasing the next big opportunity.

Done right, an investment review isn't about chasing last year's winners or getting lost in short-term noise. It’s about making sure your money continues working toward the life you want — not just today, but five, ten, or twenty years down the road.

If you take time to regularly walk through it (or better yet, walk through it with someone who knows the landscape), you dramatically improve your chances of reaching your goals — with a lot less stress along the way.

Thank You

If you’ve made it this far, thank you. Seriously. I don’t take it lightly that you trust me to help guide your financial future — or that you take the time to read through what I send.

My goal with these newsletters is to keep you informed, confident, and focused on what really matters — not just the day-to-day market noise, but the long-term plan we’re building together.

If you found this helpful, I’d be honored if you passed it along to a friend, family member, or colleague who might benefit from it too. Most people don’t have a trusted advisor in their corner, and sometimes all it takes is one good resource to start a better financial path.

As always, if anything in here sparked a question or if there’s something going on in your world that you want to talk through, just reach out. I’m here to help.

Gratefully,
Scott Brooks, CFP®
Brooks Wealth Management

Disclosure

Brooks Wealth Management LLC is a Registered Investment Adviser in the states of Colorado and California. Advisory services are only offered to clients or prospective clients where Brooks Wealth Management LLC and its representatives are properly registered or exempt from registration. “Likes” should not be considered a positive reflection of the investment advisory services offered by Brooks Wealth Management LLC.

Scott Brooks is an investment adviser representative of Brooks Wealth Management LLC. The firm is a registered investment adviser and only conducts business in jurisdictions where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability.

The information presented on this post is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. Comments should not be construed as an offer to buy or sell, or a solicitation of an offer to buy or sell the investments mentioned. A professional adviser should be consulted before implementing any of the strategies discussed. Investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client's portfolio. All investment strategies can result in profit or loss.