How my portfolio fared in previous bear markets

Key Concepts

• Portfolio Performance: The comparative growth of an investment portfolio against a benchmark index.
• S&P 500: A stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States.
• Drawdown: The peak-to-trough decline during a specific record period for an investment.
• Bear Market: A market condition in which securities prices fall 20% or more from recent highs, often accompanied by widespread pessimism.
• Volatility: The rate at which the price of a security increases or decreases for a given set of returns.

Portfolio Performance Analysis (2019–2026)

The speaker presents a seven-year performance review of their investment portfolio, spanning from January 2019 to January 2026. The data highlights a significant outperformance of the market benchmark, despite experiencing periods of high volatility.

• Total Returns: The speaker’s portfolio achieved a cumulative gain of 267%, significantly outperforming the S&P 500, which recorded a 175% gain over the same period.
• Volatility and Drawdowns: Despite the long-term success, the portfolio was subject to substantial periodic declines, demonstrating that even high-quality stock selections are not immune to market-wide downturns.

Chronology of Market Drawdowns

The speaker identifies three specific historical events that triggered double-digit percentage drops in their portfolio value:

1. 2020 COVID-19 Pandemic: During the initial market crash caused by the global pandemic, the portfolio experienced a 36% drawdown, which was slightly deeper than the decline seen in the S&P 500.
2. 2022 Interest Rate Hikes: As the Federal Reserve aggressively raised interest rates to combat inflation, the portfolio suffered a 26% decline.
3. 2025 Tariff Implementation: Following the imposition of global tariffs by the Trump administration, market panic ensued, resulting in a 19% drop in the portfolio’s value.

Key Arguments and Perspectives

• The Reality of Volatility: The speaker emphasizes that experiencing double-digit drawdowns is a normal part of the investment journey. Even when holding "very, very good companies," investors must be prepared for significant fluctuations in asset value.
• Long-term vs. Short-term: The data serves as evidence that short-term volatility (the drawdowns) does not necessarily negate long-term success (the 267% total gain). The speaker suggests that resilience during these periods is a prerequisite for achieving superior returns.

Synthesis and Conclusion

The primary takeaway from this performance review is that market volatility is an inherent feature of equity investing, not a bug. By comparing their portfolio to the S&P 500, the speaker demonstrates that while they were able to achieve alpha (returns exceeding the benchmark), they were also subject to the same—and sometimes greater—downside risks during macroeconomic shocks. The core lesson is that investors must maintain a long-term perspective and accept that significant portfolio drawdowns are inevitable, even when the underlying assets are of high quality.