You Already Missed Those Returns

When the news finally arrived

On July 30, 2020, the government reported that the U.S. economy had shrunk at a 32.9% annual rate in the second quarter, the biggest drop on record. It was a frightening headline. Anyone who waited for that number to decide what to do with their portfolio was months late.

Stocks had already done their reacting. The S&P 500 fell about 34% from its February 19 high to its March 23 low, and by the day the GDP report came out, it had climbed about 45% off that low. Less than three weeks later, on August 18, it closed at a new record high. The bad news was real, and the market had dealt with it long before it was official.

Prices move first

Markets price in what investors expect. If millions of buyers and sellers believe something will happen nine months from now, that belief is already in today's price. Acting when the news finally shows up means acting after the price has moved. What moves prices from here is what nobody saw coming, and nobody can plan a trade around that.

Nearly 80% of families with $25 million or more say they worry about inflation, market volatility and geopolitical instability. Those are fair things to worry about. The expensive part is acting on the worry after the headline, when the price has already changed.

The same thing happens with good news

We heard a story recently about an investor who asked whether he should move money out of U.S. stocks and into international stocks, since international stocks had such a strong 2025. They did. The MSCI ACWI ex USA Index, a broad measure of stocks outside the U.S., returned 32.4% last year. The answer he got was short: he had already missed those returns.

Buying last year's winner is called return chasing, and it runs on the same mistake as selling after a scary headline. If everyone expected an investment to beat everything else next year, nobody would sell it to you at today's price. Buyers would bid the price up until the return you could expect from there looked ordinary. A great year in the rearview mirror is already in the price you would pay.

For a family with significant wealth, chasing can cost more than a missed year. Moving a large taxable portfolio from one market to another usually means selling holdings that have grown a lot, which means paying capital gains tax on that growth. You would be handing over a tax bill today to buy returns that already happened.

So what are you going to do about it?

There are good reasons to change what you own: a business sale, a new goal, money you will need in the next few years, or a portfolio that has drifted away from its targets. Rebalancing back to those targets trims what has done well and adds to what has lagged, which is the opposite of chasing.

If you ask us whether to move money into whatever just had a great year, we will ask you what changed in your plan. Most of the time the answer is nothing, and the market has already done the work.

The next time a headline scares you or last year's winner tempts you, ask what changed in your plan. If nothing did, leave the portfolio alone.

Sources

U.S. Bureau of Economic Analysis, "Gross Domestic Product, 2nd Quarter 2020 (Advance Estimate) and Annual Update," July 30, 2020 (the advance estimate; BEA later revised the figure). https://www.bea.gov/news/2020/gross-domestic-product-2nd-quarter-2020-advance-estimate-and-annual-update and CNBC, "Dow drops more than 200 points after the biggest U.S. GDP contraction on record," July 30, 2020. https://www.cnbc.com/2020/07/29/stock-market-futures-open-to-close-news.html

S&P Dow Jones Indices, S&P 500 daily closes via Federal Reserve Bank of St. Louis (FRED), series SP500: 3,386.15 on February 19, 2020; 2,237.40 on March 23, 2020; 3,246.22 on July 30, 2020. Declines and gains calculated from those closes; price index, dividends not included. https://fred.stlouisfed.org/series/SP500

NPR, "The Big Comeback: S&P 500 Closes At Record High 6 Months After Coronavirus Plunge," August 18, 2020 (close of 3,389.78). https://www.wbur.org/npr/903252878/the-big-comeback-s-p-500-closes-at-record-high-6-months-after-coronavirus-plunge

Michael Kitces and John Bowen, "The 3 Concerns Keeping $25M+ Families Up at Night," Kitces.com, August 2025, citing CEG Insights research. https://www.kitces.com/blog/ultra-high-net-worth-family-concerns-25m-advisor-services-upmarket/

MSCI, "MSCI ACWI ex USA Index (USD)" factsheet, annual net returns in USD, 2025: 32.39%. https://www.msci.com/documents/10199/86494e1f-914e-4aa5-82a9-2e29ed5adbbf

Disclosures

All advisory services are offered through Savvy Advisors, Inc. (“Savvy Advisors”), an investment advisor registered with the Securities and Exchange Commission (“SEC”). Savvy Wealth Inc. (“Savvy Wealth”) is a technology company and the parent company of Savvy Advisors. Savvy Wealth and Savvy Advisors are often collectively referred to as “Savvy”.

Clayton Johnson is an investment advisor representative registered with Savvy Advisors, Inc. ("Savvy"). All investment advisory services offered by Clayton Johnson are offered through Savvy. Pillar Capital is an independent marketing brand name used by Clayton Johnson for advertising and marketing purposes only. Pillar Capital and Savvy are not related or affiliated. Information presented here is for informational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any product or security. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here. The illustration was created with AI.

Charts and data from third parties are used for illustration, and links to third-party websites are provided for reference. Savvy and Pillar Capital do not endorse and are not responsible for third-party content. Mention of any company is not a recommendation to buy or sell its securities. Indices are unmanaged and not available for direct investment, and their returns do not reflect fees or expenses. Past performance does not guarantee future results.

Historical return data is provided for context only. It does not represent the performance of any actual portfolio and does not guarantee future results.

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