Navigating Market Turmoil: Should We Get Out of US Shares? (Part 1)
Global markets are experiencing heightened volatility, driven by rising interest rates, geopolitical tensions, and inflationary pressures. For retirees and pre-retirees, these conditions raise valid concerns about portfolio stability. One common question we hear is: Should we get out of US shares? In this first part of our four-part series, we explore this question to provide clarity without offering personal financial advice.
Understanding US Shares in Today’s Market
US shares, particularly those in indices like the S&P 500, are a significant component of many diversified portfolios. They offer exposure to leading global companies in technology, healthcare, and consumer goods. However, 2024 and early 2025 have seen sharp fluctuations in US markets due to:
Federal Reserve Policy: Interest rate hikes to combat inflation have increased borrowing costs, impacting corporate earnings.
Geopolitical Risks: Ongoing conflicts and trade tensions have unsettled investor confidence.
Economic Indicators: Slowing GDP growth and mixed corporate earnings reports have fueled uncertainty.
Despite these challenges, US shares have historically delivered strong long-term returns. The graph below illustrates the S&P 500’s performance over the past 20 years, highlighting its resilience through crises like the 2008 Global Financial Crisis and the 2020 COVID-19 crash.
Graph: S&P 500 Index (2005–2025), adjusted for inflation. Data source: Yahoo Finance (2025).
This graph shows that while short-term declines are common, the index has generally trended upward over time. For example, after dropping 37% in 2008, the S&P 500 recovered to pre-crisis levels by 2013 and continued to grow.
Key Considerations
When evaluating whether to adjust exposure to US shares, consider the following:
Diversification: US shares often complement other asset classes like bonds or international equities, reducing overall portfolio risk. Over-concentration in any single market, however, can increase vulnerability.
Investment Horizon: Retirees with shorter timeframes may prioritise capital preservation, while pre-retirees with longer horizons may tolerate volatility for potential growth.
Market Timing Risks: Exiting markets during downturns can lock in losses. Historical data shows that missing the best-performing days in the S&P 500 (often occurring during recoveries) significantly reduces long-term returns (J.P. Morgan, 2024).
Rather than reacting to short-term volatility, it may be worth reviewing your portfolio’s alignment with your financial goals. A licensed financial planner can help assess whether your exposure to US shares suits your risk tolerance and objectives.
Final Thoughts
US shares remain a cornerstone of global investing, but their volatility can feel unsettling. By focusing on diversification and long-term goals, you can navigate market turbulence with greater confidence. In our next newsletter, we’ll explore another common question: Do we hold any gold?
For personalised guidance, contact a licensed financial planner to discuss your circumstances.
References:
Yahoo Finance. (2025). S&P 500 Historical Data. Retrieved from finance.yahoo.com.
J.P. Morgan. (2024). Guide to the Markets. Retrieved from jpmorgan.com.
Disclaimer: This blog provides general information only and does not constitute financial advice. It has not taken into account your objectives, financial situation, or needs. Before making any financial decisions, you should consider whether the information is appropriate for your circumstances and seek advice from a licensed financial adviser. Past performance is not indicative of future results. Investments carry risks, including the potential loss of capital. Fitrio Wealth is an Authorised Representative (1234878) of Charter Financial Planning Limited; ABN 35 002 976 294, Australian Financial Services Licence Australian Financial Services Licensee and Australian Credit Licensee; Licensee No: 234665 .