Volatility as a Catalyst to Building Long-Term Investor Relationships

After reaching record highs earlier this year, the S&P 500 subsequently declined by as much as 10% amid significant market volatility. While noteworthy, declines of this size aren’t unusual. Since 1980, the S&P 500 has corrected by 5% or more nearly every year and by 10% nearly 20 times¹. While short-term declines are unsettling, history shows that markets recover, often faster than expected.

The Market Has Consistently Recovered Through Every Crisis

S&P 500 Index Performance (1985 – 2025)

^{Source: FactSet Research Systems. Declines reflect peak-to-trough moves during major market disruptions.}

History Favors the Visible

Market dislocations often shake short-term investor confidence. However, history shows that the companies that stay visible, accessible, and communicative during turbulent times are often the ones best positioned to outperform when the market stabilizes.

Following the 1987 crash, companies that remained engaged with investors were quicker to regain trust and attract capital as the markets rebounded. During the dot-com bust, those that could clearly articulate their sustainable business models emerged with stronger, more durable investor bases. In the wake of the global financial crisis, proactive communication around liquidity, balance sheet strength, and operational resilience became a key differentiator between companies that recovered quickly and those that lagged. And at the onset of the COVID-19 pandemic, companies that communicated transparently about near-term disruptions while reiterating their long-term strategies were rewarded with investor confidence, even before broader market sentiment turned positive.

Consistent and credible communication builds confidence, attracts attention from long-term investors, and sets the stage for relative outperformance in the recovery phase. Conversely, silence creates a vacuum that speculation fills. The message to management teams is clear—when uncertainty rises, so too should your visibility.

Turbulence Creates Opportunity for Long-Term Investors

Market volatility often triggers fear and reactionary behavior, but for disciplined, long-term investors, it’s a time of heightened focus and opportunity. Disruptions in pricing, sentiment, and expectations create ideal conditions for thoughtful capital deployment. As markets shake off complacency and reprice risk, investors step back to reassess exposures, rotate out of riskier positions, and search for companies with the resilience and vision to outperform over the long run.

This dynamic creates a powerful opening for companies. Amid the noise and near-term uncertainty, strong investment narratives stand out, especially those anchored in durable fundamentals, credible management teams, and a clear strategic direction. When companies lean into this moment with transparent, proactive communication, they will be engaging with investors who are actively looking to reset their portfolios for the next phase of the cycle.

The Right Time for Proactive Investor Relations

Rather than retreat, companies should see periods of volatility as a window to reintroduce or reframe their investment narrative. Long-term investors want to understand how companies are managing through the current environment, where they’re finding operating leverage, and how today’s actions position them for tomorrow’s growth. This is not about defending short-term performance—it’s about reinforcing the case for long-term value creation.

In short, turbulence creates opportunity, not just for investors, but for companies ready to meet the moment.

Proactive outreach to prospective investors during these moments signals confidence and strategic clarity. It demonstrates that management is focused not just on managing through near-term turbulence, but on building long-term relationships grounded in transparency and aligned expectations.

Investors evaluating new positions are closely watching how companies behave during periods of stress. Do they communicate clearly and consistently? Are they responsive to questions and concerns? Do they offer insight into how short-term challenges are being managed without losing sight of the broader strategic direction? By showing up and engaging directly, companies can differentiate themselves in ways that static disclosure cannot.

Critically, laying this groundwork today helps position the company for stronger support when markets recover. Investors brought into the story during periods of volatility are often more resilient, having underwritten their investments with a full understanding of both the challenges and the opportunity. These relationships can become foundational to long-term investor alignment.

^{1. Sources: Standard & Poor's, Bloomberg Finance L.P., Fidelity Investments.}