It’s the New Year, and many are wondering how their stock portfolios performed in 2025. For most Filipinos, the results have been disappointing. Headlines talk about political uncertainty and weak growth, while the Philippine Stock Exchange Index (PSEi) hovers near 6,000—roughly the same level as it was back in 2012. Consequently, many have already decided that stocks don’t work and have given up entirely.

Part of the problem is expectations. The usual investment advice tells us that stocks demand a long time horizon filled with wide fluctuations—the price to pay for being more profitable than most other asset classes. While this is true, it must be emphasized that a “long time horizon” can take much longer than expected. People I have spoken to are shocked to hear that their definition of the “long term,” which usually hovers at a measly one to three years, is nowhere near long enough to assure positive outcomes. How long should we be prepared to hold our stocks to survive a downturn? While there is no universal definition of the long term, history can give us some hints.

According to the Canadian Portfolio Manager, the Vanguard All-Equity ETF, a globally diversified equity fund, only showed no historical losses when measured in 13-year chunks. For investment horizons below 13 years, there would have been at least one historical instance where an investor ended up with a loss. International history offers even starker examples; Japan’s “Lost Decade” began in 1990, wiping out massive amounts of value in the Nikkei 225, and that market only returned to its past peak in 2024—34 years later. Even local history serves as a warning. If you had invested at the peak of the PSEi in 1997 and saw your portfolio decimated by the Asian Financial Crisis, your holdings would have only recovered in 2007, a full ten years later.

Does this mean we should exit the markets as soon as we see a drop? Not necessarily. In the book Geopolitical Alpha, Marko Papic cites a BCA Research study showing that massive market drops tend to be followed by large recoveries a year later. For instance, the Cuban Missile Crisis in 1962 tanked the S&P 500 by 10.52 percent, but one year later it was up 27.84 percent. When President Bush spoke against Iraq in the UN in 2002, markets were down 25.11 percent, but a year later they had risen 14.85 percent. Similarly, during the BREXIT vote in 2016, markets crashed 5.6 percent only to recover 15.38 percent a year later. A significant downside of selling during times of turmoil is the high risk of missing these potential recoveries.

Long-term investing is not a mere one-to-three-year commitment. When you invest for the long term, you must be ready to hold for decades until retirement. It is a long journey filled with turbulence, but if you persevere until the end, it can also be rewarding. According to Yahoo Finance, the PSEi was at approximately 440 in 1987. In today’s bearish environment entering 2026, the index is hovering at around 6,000. This means that from 1987 to 2026, the PSEi’s annualized growth rate was close to a healthy seven percent—and that is before accounting for dividends, as the index only measures price movements.

Of course, none of this guarantees that markets will always go up in the long run. Prices can always fall further from where they are now, and they can stay flat for longer than expected. For example, the Nikkei 225 was at around 11,500 in 1985. By December of 2025, it was just around 50,000, representing a very weak 3.65 percent annualized rate of return over more than four decades. Even with long holding periods, you can never completely eliminate the risk of low or negative returns. Still, this is a risk we must bear because the alternative—keeping all your savings in cash—guarantees financial losses as inflation erodes your purchasing power over time.

The late and great Charlie Munger once remarked, “If investing wasn’t hard, everyone would be rich.” One of the hardest things about long-term investing is simply sticking with our plans and actually holding until we see the benefits—through market booms and busts, and through decades of peaks and bottoms. So when you feel discomfort seeing markets go down, remember that this doesn’t necessarily mean you’re doing anything wrong. This is simply what it’s like to be a long-term investor.

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