Why Market Volatility is the Price of Wealth Creation

Published: March 5, 2026 | Red Bank, NJ

TL;DR

• $100,000 invested in the S&P 500 in January 1973 grew to over $24 million by year-end 2025, with dividends reinvested [OfficialData.org]
• S&P 500 cash dividends rose from roughly $14.89 per share in 1996 to $78.92 in 2025, a 430%+ increase [Standard & Poor’s via Multpl.com]
• Private nonresidential fixed investment hit $4.29 trillion (Q3 2025), roughly 14% of GDP [FRED, St. Louis Fed]
• Apple committed $600 billion, and the Stargate Project pledged $500 billion in U.S. infrastructure spending [Apple Newsroom; OpenAI]
• The U.S. has been a net total energy exporter since 2019 [U.S. Energy Information Administration]

What is the real risk for long-term investors: stock volatility or losing purchasing power?

The real risk is purchasing-power erosion. Between 1996 and 2025, the Consumer Price Index roughly doubled. A dollar held in cash over that period lost about half its buying power. During that same 30-year window, the S&P 500’s annual cash dividends per share rose from approximately $14.89 to $78.92, a gain of more than 430% or 5.3x [Standard & Poor’s via Multpl.com]. Equities did not just keep pace with inflation. They crushed it.

Most investors define risk as the zigzag on a price chart. That definition gets the problem backward. For someone with a 20- or 30-year time horizon, the existential threat is not a temporary drawdown. It is the slow, silent destruction of purchasing power. Cash and low-yielding bonds guarantee that erosion. Equities offer the only proven long-term hedge.

Nick Murray, the veteran financial advisor and author, frames this tradeoff precisely: you must choose which end of your investing lifetime absorbs the insecurity. Accept temporary volatility today, or accept permanent loss of lifestyle tomorrow. The investor who fled to “safety” in 1996 and held cash for 30 years watched half the value of every dollar evaporate.

How did $100,000 invested in 1973 become $24 million?

Through compounding and reinvested dividends over 52 years. A lump-sum $100,000 investment in the S&P 500 in January 1973—entering an era of oil embargoes, stagflation, Watergate, and double-digit inflation—grew to approximately $24 million by late 2025, assuming all dividends were reinvested. That works out to roughly 10.9% annualized [Robert Shiller data via OfficialData.org].

This period included every kind of crisis an investor can imagine. The 1973–1974 bear market wiped out 48% of the index. The 1987 crash dropped 34% in weeks. The dot-com bust erased 49%. The 2008 financial crisis cut the index by 57%. The 2020 pandemic sell-off hit 34% in 33 days. Every single one of those declines was temporary. The recovery was permanent.

The advance is structural. Corporate earnings grow because productive enterprises constantly adapt, cut costs, hire talent, and invest in new markets. Dividends compound on top of that earnings growth. Price appreciation reflects the underlying expansion of business value. None of this requires a calm geopolitical environment. It requires only time and the discipline not to sell at the bottom.

How often do bear markets happen, and how long do they last?

Roughly every 3.5 to 5 years. Since 1928, the S&P 500 has experienced 27 bear markets (declines of 20% or more from a recent peak), according to data compiled by Hartford Funds and Ned Davis Research. The average bear market lasted about 9.6 months and declined roughly 34%. The average bull market, by contrast, lasted 2.7 years and advanced 114%.

Bear markets are recurring events, not anomalies. They are the toll investors pay for the 10–11% long-term annual returns equities have historically delivered. The 2025 tariff-driven volatility fits this pattern precisely. The S&P 500 suffered a sharp intraday decline of roughly 21% before recovering. By year-end, the index finished up approximately 16% [Slickcharts.com].

What does the $8.8 trillion U.S. investment pipeline mean for equities?

It creates a structural earnings floor. Private nonresidential fixed investment (PNFI)—spending on factories, equipment, and intellectual property—hit $4.29 trillion at a seasonally adjusted annual rate in Q3 2025, roughly 14% of GDP [FRED, Federal Reserve Bank of St. Louis]. The total announced project pipeline in the U.S. has surged to approximately $8.8 trillion, spanning semiconductor fabrication, data center construction, energy infrastructure, and advanced manufacturing.

Two commitments stand out by their sheer scale. Apple increased its U.S. investment plan to $600 billion over four years, including a new 250,000-square-foot server manufacturing facility in Houston and an end-to-end domestic silicon supply chain producing more than 19 billion chips in 2025 [Apple Newsroom, August 2025]. The Stargate Project—a joint venture led by OpenAI, SoftBank, and Oracle—pledged $500 billion for AI data center infrastructure, with an initial $100 billion deployed immediately and the first campus already operational in Abilene, Texas [OpenAI, January 2025].

The Congressional Budget Office projects that real business fixed investment will grow 3.9% in 2026, driven by generative AI spending and investment incentives in the 2025 reconciliation act [CBO, Budget and Economic Outlook 2026–2036]. This physical build-out creates durable demand for steel, concrete, electrical equipment, and specialized labor. It anchors corporate revenue in tangible capital formation, not just software clicks.

Sources: Apple Newsroom; OpenAI; FRED, St. Louis Fed; CBO

Why do great companies get stronger during bear markets?

Because crises force operational discipline and create acquisition opportunities. When revenue drops, well-capitalized firms cut marginal costs, shutter inefficient operations, and tighten cash management. That is the defensive phase. Then comes the offensive move: they recruit top talent released by weaker competitors and acquire distressed rivals at discounted valuations.

Apple, Microsoft, and JPMorgan Chase all made significant acquisitions during or immediately after the 2008–2009 financial crisis. These purchases added capabilities and market share that compounded for the next decade. The pattern repeats in every major downturn. The strongest businesses use recessions the way a blacksmith uses fire: to remove impurities and forge something harder.

For the long-term shareholder, this process is the mechanism that converts temporary drawdowns into permanent advances. The S&P 500 reflects the aggregate behavior of hundreds of these adaptive enterprises. Their collective response to adversity is what produces the upward slope in the chart over decades.

What does the “time price” of goods reveal about real wealth creation?

Goods cost dramatically less human labor than they did a century ago. Economist Gale Pooley (Utah Tech University, Discovery Institute, Cato Institute) measures the “time price” of goods—the actual labor required to buy them. In 1898, an unskilled worker earning roughly 8 cents per hour needed 75 minutes of labor to buy a can of Campbell’s Tomato Soup. By 2025, at a price of $1.28 and an entry-level wage of $18.75 per hour, that same can costs just 4.1 minutes [Pooley, “Tomato Souperabundance,” December 2025].

Wages are now 234 times higher than in 1898, while the soup’s nominal price rose only 12.8 times. Wages grew 18.3 times faster than the product’s price. For every hour of labor that once bought a single can, a worker today gets 18.3 cans. That 1,730% increase in abundance is the tangible output of innovation and capital investment. Media coverage obsesses over the price tag. The shareholder owns the enterprise behind the falling time price.

Does U.S. energy independence protect equities from geopolitical shocks?

It provides a significant buffer. The United States has been a net total energy exporter since 2019 [U.S. Energy Information Administration]. In 2024, for the third consecutive year, U.S. energy production set records and exceeded domestic consumption. Crude oil production hit 13.2 million barrels per day; LNG exports topped 100 million metric tons for the first time in history.

This is a structural change from the 1970s, when the U.S. depended on OPEC for 70% of its petroleum imports. Unlike that era of vulnerability, the current American economy can absorb oil-price spikes without the cascading damage to GDP, employment, and corporate earnings that characterized the stagflationary period. When the IRGC threatens the Strait of Hormuz with drones and speedboats, U.S. producers stand to benefit from higher global prices while domestic supply remains secure.

Energy independence does not eliminate geopolitical risk. But it sharply reduces the transmission mechanism through which foreign conflicts damage domestic corporate earnings and household budgets.

What should a long-term investor do about current volatility?

Stay invested, stay diversified, and keep a multi-decade perspective. The data is unambiguous. Missing the best days in the market devastates long-term returns. According to Hartford Funds, roughly 42% of the S&P 500’s strongest single-day gains in the last 20 years occurred during bear markets. Another 36% came in the first two months of a new bull market, before anyone knew the recovery had started.

The investor who sold during the 2020 COVID crash and waited for clarity missed a 70%+ rally in the following 12 months. The investor who panicked in March 2009 missed the longest bull market in modern history. The pattern is always the same: the cost of avoidance exceeds the cost of endurance.

Equity investing gives the ordinary household access to the same compounding mechanism that builds institutional fortunes. It requires no insider access, no special allocation, no minimum net worth. It requires only a commitment to stay seated through the temporary discomfort that produces long-term results.

Ask yourself: which risk are you more prepared to accept—the drawdown on your screen today, or the permanent erosion of your purchasing power over the next 30 years?

About the Author

David L. Berkowitz, Investor and Financial Advisor. Nearly 40 years of experience—from trading and research at a $250 million hedge fund, to two decades as a portfolio manager. Now helping individuals and families become shareholders at VAP Wealth Advisors in Red Bank, NJ.

Verify David’s credentials on FINRA BrokerCheck (CRD#: 1384375): https://brokercheck.finra.org/individual/summary/1384375

Endnotes

1. S&P 500 Returns Since 1973. Lump-sum investment calculator using Robert Shiller data. https://www.officialdata.org/us/stocks/s-p-500/1973

2. S&P 500 Dividend Data. 12-month real dividend per share, Standard & Poor’s and Robert Shiller. https://www.multpl.com/s-p-500-dividend/table/by-year

3. FRED: Private Nonresidential Fixed Investment (PNFI). Q3 2025 seasonally adjusted annual rate, $4,291.558 billion. https://fred.stlouisfed.org/series/PNFI

4. Apple U.S. Investment Commitment. $600 billion over four years, American Manufacturing Program. https://www.apple.com/newsroom/2025/08/apple-increases-us-commitment-to-600-billion-usd-announces-ambitious-program/

5. OpenAI Stargate Project. $500 billion AI infrastructure initiative announced January 2025. https://openai.com/index/announcing-the-stargate-project/

6. Hartford Funds: Bear Markets. 27 bear markets since 1928, average duration 9.6 months, best days occur in bear markets. https://www.hartfordfunds.com/practice-management/client-conversations/managing-volatility/bear-markets.html

7. U.S. Energy Information Administration. U.S. has been net total energy exporter since 2019. https://www.eia.gov/energyexplained/us-energy-facts/imports-and-exports.php

8. CBO Budget and Economic Outlook 2026–2036. Real business fixed investment projected to grow 3.9% in 2026. https://www.cbo.gov/publication/62105

9. Gale Pooley, “Tomato Souperabundance.” Time price analysis of Campbell’s Soup, 1898–2025. https://galepooley.substack.com/p/tomato-souperabundance

10. S&P 500 Returns by Year. Annual total returns including dividends. https://www.slickcharts.com/sp500/returns

11. OpenAI: Five New Stargate Sites. Expansion to nearly 7 GW planned capacity, September 2025. https://openai.com/index/five-new-stargate-sites/

12. EIA: U.S. Hydrocarbon Production Outlook. AEO2025 projections for crude oil and natural gas. https://www.eia.gov/todayinenergy/detail.php?id=65724

13. CFA Institute: Bear Market Playbook. Analysis of 15 bear markets since 1950, recessionary vs. non-recessionary. https://blogs.cfainstitute.org/investor/2025/07/22/bear-market-playbook-decoding-recession-risk-valuation-impact-and-style-leadership/

14. EIA: U.S. Energy Imports at Lowest Share in 40 Years. 2024 net energy exporter for third consecutive year. https://www.eia.gov/todayinenergy/detail.php?id=65664

15. Nick Murray, Simple Wealth, Inevitable Wealth. Framework for choosing between temporary volatility and permanent purchasing-power loss. Published by The Nick Murray Company.

Important Disclosures

This material is provided for informational and educational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any securities. Past performance is not indicative of future results. All investing involves risk, including potential loss of principal. The opinions expressed are those of the author as of the publication date and are subject to change without notice. Data and statistics cited are believed to be from reliable sources but accuracy is not guaranteed. No investment strategy can ensure a profit or protect against loss in periods of declining values. This content does not account for your individual financial situation, objectives, or risk tolerance. Consult a qualified financial advisor before making any investment decisions. Securities offered through Geneos Wealth Management, Inc. Member FINRA / SIPC. Advisory services offered through Geneos Wealth Management, Inc., a registered investment advisor.