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By Clint Gharib

While May brings the “joy” of final exams and the SAT for those poor souls required to take it, the financial markets may soon face a test of their own: a new Chairman of the Federal Reserve.

Historically, whenever a new Fed Chair steps into office, markets rarely remain calm. Investors know that leadership changes can signal shifts in monetary policy. I’ve often heard it said that markets “test the new chairman”—in other words, they push asset prices around to see where the new leader stands on inflation, economic growth, and financial stability.

Research compiled by Barclays strategist Alexander Altmann shows that since 1930, the S&P 500 has experienced average peak-to-trough declines of roughly 5% in the first month, about 12% within three months, and approximately 16% within six months after a new Fed chair takes office, according to data reported by Bloomberg. Interestingly, volatility often begins even earlier, sometimes as much as 20 days before the new chair officially assumes the role.

Yet those early swings rarely define the full story. Over longer periods, markets have historically recovered, with returns over the following year tending to move back toward the S&P 500’s long-term average annual gain of roughly 10%.

Once investors begin to understand the new chair’s policy framework, market focus typically shifts back to corporate earnings and economic growth. History reminds us that short-term policy uncertainty does not necessarily change long-term market outcomes.

For investors, periods like this highlight an important distinction: reacting emotionally to short-term volatility versus having a plan in place before turbulence arrives. Preparing for these moments might include maintaining some cash to deploy during market declines, reviewing what you own and why, and making sure the risk in your portfolio still matches your long-term goals.

If the current market environment—or the changing policy landscape—has left you questioning whether your portfolio is positioned appropriately for what comes next, it may be worthwhile to get a second opinion. A thoughtful review can often uncover opportunities—and risks—that may otherwise go unnoticed.

The S&P 500 Index is a widely recognized index including a representative sample of 500 leading companies in leading sectors of the U.S. economy. Indexes are unmanaged. Investors cannot invest directly into indexes. Past performance does not guarantee future results.  All historical market data referenced above was obtained from S&P Global (www.spglobal.com)

Opinions expressed are that of the author and are not endorsed by the named broker/dealer or its affiliates.  All information herein has been prepared solely for informational purposes and should not be considered legal or tax advice.  It is not an offer to buy, sell, or a solicitation of an offer to buy or sell any security or instrument to participate in any particular trading strategy and is not intended to provide, & should not be relied on for, tax, legal or accounting advice. You should consult your own tax professional regarding your specific situation. Past performance does not guarantee future results. Certain statements contained within are forward-looking statements including, but not limited to, statements that are predictions of future events, trends, plans or objectives.  Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties. Oxford Retirement Advisors is an independent firm with Securities and Advisory services offered through Madison Avenue Securities, LLC (“MAS”), member FINRA/SIPC and a Registered Investment Advisor.  Oxford Retirement Advisors and MAS are not affiliated entities. 

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