‘Time to Stock Up,’ Says Investor About Vanguard S&P 500 ETF (VOO)

The market has staged an impressive comeback. Since hitting its late-March low, the S&P 500 has surged about 13%, clawing back losses as easing tensions in the Middle East helped restore confidence and pull investors back into equities. What began as a selloff tied to geopolitical fears has, at least for now, given way to a strong recovery as concerns around energy disruptions and broader escalation have moderated.

Still, if this year has shown anything, it’s how quickly conditions can shift. Periods of geopolitical stress can emerge with little warning, and the recent rebound does not eliminate the risk of renewed volatility should tensions flare up again. For investors, that raises an important question – how to stay positioned for upside while remaining prepared for another bout of market stress.

There’s a litany of avenues to de-risk for those uncomfortable with the current environment, ranging from diverse portfolios to leaving the equity market entirely. ETFs, which combine multiple securities into a single investment, offer a straightforward way to spread the risk.

One popular ETF is the Vanguard S&P 500 ETF (VOO). As the name declares, VOO tracks the S&P 500 index, which is made up of the biggest names traded on U.S. stock exchanges. Like the S&P 500 itself, VOO leans heavily on large tech names, with Nvidia (NVDA) being its largest holding.

Since its launch roughly 15 years ago, VOO has delivered strong returns for investors. The ETF is up 33% over the past year, 70% over three years, and 235% over five years. Its low expense ratio of 0.03% further strengthens the investment case.

VOO – like the rest of the market – isn’t immune to losses, acknowledges investor Dave Dierking. However, he argues that a wise investment move is to lean into these dips.

“Historically, geopolitical events have resulted in modest S&P 500 drawdowns followed by sharp recoveries,” explains the investor.

Dierking believes that betting against the long-term prospects of the S&P 500 is a fool’s errand. He notes that recessions, bear markets, and other generational events have failed to stop the index’s rising trajectory. Its annual returns of 9% to 10% speak to its ongoing success, he adds.

History, in that sense, offers a useful guide when it comes to geopolitical shocks. Episodes like 9/11 or the Iraq War triggered bouts of volatility, yet the market’s recovery was measured in months rather than years. If that pattern holds, the recent rebound may not be an outlier, but rather another example of how equities tend to absorb geopolitical disruptions and regain footing once uncertainty begins to ease.

“When short-term volatility rears its head, it’s almost always better to sit tight, do nothing, and let the power of compounding do the work for you,” concludes Dierking. (To watch Dierking’s track record, click here)

Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.