Three Steps for Handling Market Volatility

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Growing up, I loved sailing. On weekends, my cousins and I would head to Cypremort Point, where we'd spend hours on the water. Some afternoons were sunny and smooth, but others were unexpectedly rough. I vividly remember moments of sheer terror when the weather would suddenly shift, and the boat would heel sharply to one side. My fear of capsizing was real, but I knew that my uncle, at the helm, would adjust the sails and steer us through the storm. We somehow always made it back home.

The uncertainty of those sailing trips has stuck with me over the years. Each outing was different, but they all had one thing in common--change. The conditions were often unpredictable, but my uncle was prepared, having a plan for whatever came our way. This is a valuable lesson, especially when it comes to navigating the uncertain world of financial markets.

Financial markets are notoriously unpredictable, and sometimes events trigger heightened uncertainty.  The April 2nd tariffs and their unknown consequences caused the markets to roil, giving us a real-time example. The best way to handle these periods? It starts with a bit of patience.

The Power of Patience

In times of high market volatility, it's tempting to act quickly, driven by fear or the need to feel in control. But reacting impulsively often leads to regret. Sometimes, pausing—exercising patience—is the best course of action. Patience isn't passive; it's a deliberate decision to allow the needed time to reassess and/or reconfirm your strategy.

This isn’t to say that action is always wrong. Your circumstances may warrant it. The key is to avoid letting knee-jerk reactions guide your decisions. Thoughtful, informed choices matter most.

Three Steps for Dealing with Market Volatility

So, how do we deal with market turbulance?  A solid strategy enables us to resist reacting impulsively, which can lead to costly mistakes.  Here are three steps to help you prepare, with emphasis on having a plan :

1. Recognize the Historical Context of Stock Markets Look at the history of the markets over long periods. For example, over the last 50 years there have been 6 recessions. In those 50 years, there have been almost 30 periods of market corrections (10-20% drops in value) including this one. Despite these ups and downs, the long-term trend has been upward. Understanding this historical context, and considering the length of time you have remaining in the market, can help reframe your worries about the current volatility.
2. Acknowledge the Emotional Impact of Market Moves Market fluctuations can trigger anxiety, especially during significant life changes. Recognizing your emotional response to market movements helps you assess your risk tolerance. Periodically revisit your asset allocation and potentially adjust it to fit your current situation.
3. Have a Plan Built for You  Having a clear investment strategy is essential, and it needs to meet your goals at the right time.  Consider the resilience of your plan in various economic scenarios. Diversification -- across different geographies, sectors, and asset classes—is a simple yet effective way to manage risk. You may also explore alternative options for protecting your portfolio during turbulent times. While moving to cash might seem like a safe bet, it’s a decision that requires careful thought, as timing re-entry into the market can be tricky, and missing out on recoveries can be very costly.

Whether you navigate these uncertain waters on your own or seek the guidance of a trusted professional, the key is to feel confident. By having a well-considered plan with contingencies in place, you can better weather the unpredictable market storms.

All investment strategies have the potential for profit or loss.
ThirtyNorth Investments, LLC, is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements.

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