The ASX closed at an all-time high on Thursday. That may have passed unnoticed by some, as such milestones often receive modest coverage, which stands in stark contrast to the dramatic headlines that accompany market declines - terminology like “wiped off” seems to be a persistent favourite among editors.

There’s a clear reason for this - bad news sells. Fear captures attention more readily than optimism. We’re wired to react more strongly to losses than to gains. This psychological bias is well understood, but still worth revisiting - especially now.

Let’s look back to early April 2025, when those more dire headlines emerged…

At that time, global markets were reacting sharply to renewed tariff threats. Former U.S. President Donald Trump was advocating for sweeping tariffs, prompting retaliatory signals from China. And the market responded with a steep decline.

This is not unusual.

“Markets dislike uncertainty” is a well-worn phrase, but it holds true. In the face of ambiguity, investors often move to reduce exposure.

In the wake of those April events, the ASX 200 fell to 7,343 points. Fast forward 4.5 months: as of Friday, the index closed at 8,967 - a 22.1% increase.

Was that April low the precise bottom? Yes, and I highlight it deliberately—to underscore a broader point…

Investors were selling during that downturn. Some may have anticipated further losses. Others were simply reacting emotionally or intending to re-enter the market when conditions “stabilised.” Yet even just one month later, the index had risen 11.4%—more than half of the total gain since April.

Yes, it’s easier to recognise in hindsight - in the heat of battle, risks always seem very real and very different from previous market setbacks. But each time, markets have ultimately recovered and surpassed previous highs—as it has again this week.

Looking ahead, you should fully expect further downturns, but you can also expect to see new highs - this is not a guarantee, but an evidence-based projection rooted in market history.

So let me be clear:

Markets fall—and have historically recovered.
Markets rise—and are followed, eventually, by declines.

These are two perspectives on the same dynamic.

The next time the market corrects sharply, I encourage you to recall the trajectory of the past few months. If your portfolio is built on sound, diversified principles, you can afford to remain patient.

Now—while market sentiment is strong and volatility is subdued—is the time to prepare mentally and emotionally for the inevitable fluctuations ahead.

Enjoy the gains. But be prepared for the setbacks.

Rick Maggi CFP, Financial Advisor Perth