Q4 2025 Commentary: It's All 'Only on Paper'
It’s All ‘Only on Paper’ Pine Haven Investment Counsel, Inc. – Commentary – 4th Quarter 2025
Casey Fitchett CFP® & Paige Johnson Roth, CFA®
We often hear clients and prospects repeat a version of “I don’t want to lose any money” or “isn’t the stock market too risky?”. These sentiments are completely understandable; no one likes the idea of losing their hard-earned money. By not investing in the stock market, you’re not eliminating risk, you’re just changing the type of risk you’re exposed to. Although not as obvious or evident in the short-term, allowing inflation to erode purchasing power by not investing in the stock market is a serious risk in your retirement years.
Experiencing a Downturn
What we know: the stock market will go down.
What we don’t know: when that’ll happen.
On paper (or on the screen) it will look like you have lost money at that moment. However, you only lock in the loss if you sell in a panic.
Stocks (and bonds) can absolutely lose money in the short term if you find yourself in a position where you need to sell. Your time frame is the most important part of determining if you should be invested in stocks. The other deciding factor is whether the red numbers on the screen will send you into a selling spree.
We have found that individuals who do well with their finances/investments:
- Have a core group of company stocks that they are familiar with.
- Have enough less volatile investments to cover 3-5 years of cash flow needs.
- Have dividend stocks as part of their investments.
- Have a basic understanding of markets and economic cycles (which tend to be cyclical) and have a long-term perspective (at least 10 years).
- Have diversified investments (different stock sectors, international, real estate funds, and fixed income).
- Benefit from an adviser (not CNBC) – so that you don’t panic when the stock market goes down (which it will!)
- Okay, we are a little biased about this one.
Familiarity
Buy what you know and like. Think like an owner, because as a shareholder you own part of the company. You don’t need to chase the latest “hot stock” or craze. At Pine Haven we focus the core of our client’s portfolio on large/mega cap stocks that are well-run, dominate their field, and have low debt.
Safety Net
For our retired clients, we will make sure that there is enough in safer investments to take care of 3-5 years of required cash flow. We will do this with money market funds and fixed income securities (aka bonds). These bonds come in the form of individual treasuries and bond funds.
Dividend Stocks
When you buy a stock, you’re buying a small piece of a company. If that company makes money, it can choose to share some of its profits with the people who own it. That shared profit is called a dividend.
Dividends are usually paid in cash on a regular schedule. Not all companies pay dividends—some prefer to use their profits to grow the business instead. Companies that do pay dividends are often more established and focused on steady income. When reviewing companies to invest in we do take into consideration the dividend yield and the likelihood of the company increasing the dividend over time.
Current yields on stocks are quite low (S&P 500 yield is 1.2%). However, over time dividends have provided 31% of the return of the S&P 500.2 Dividends and capital appreciation are the two components of returns.
Market Cycles
Markets move in cycles, and volatility is a normal part of investing. Periods of growth are naturally followed by slowdowns, and downturns are eventually followed by recoveries. While short-term swings can feel unsettling, history shows that staying invested through market cycles has been key to long-term success. Reacting impulsively to volatility often does more harm than good, and predicting outcomes is rarely sustainable. Understanding this rhythm can help investors remain focused on their goals rather than reacting to temporary noise.
Diversification
Diversification is about not putting all your eggs in one basket. By spreading investments across different asset classes, sectors, and regions, diversification can help reduce risk and smooth returns over time. While it doesn’t eliminate losses, it can help protect portfolios from being overly dependent on any single investment or market outcome.
Advisor
Working with a financial advisor provides more than just investment guidance; it offers perspective, discipline, and a personalized strategy. An advisor helps align financial decisions with long-term goals, especially during periods of uncertainty, and serves as a steady partner to keep plans on track when emotions or market headlines threaten to derail progress.
The year reminded us that investing is a journey that requires patience, perspective, and trust in a well-constructed plan. While markets will inevitably continue to fluctuate, staying focused on long-term objectives has historically been the most reliable path to success.
As always, we appreciate the confidence you place in us and look forward to navigating the year ahead together.
1. Growing up, I (Paige) remember that my Mom said that the losses were all “only on paper” after a significant market downturn in October 1987.