Navigating the Storm: How to Stay Calm in Volatile Markets

2025 has been quite a year! The President is quickly introducing new tariffs, and Elon Musk's team at the Department of Government Efficiency is rapidly downsizing the government. This has caused some market turbulence and volatility, which might lead to a recession or, for now, just a sharp correction.
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So, how can you stay calm and collected in such a volatile market?

​Here are ten strategies to help you stay calm and focused:
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1. Hire the Right Manager: Choose a financial advisor or wealth management professional who prioritizes risk management and downside protection. A good manager will help you navigate market volatility by implementing strategies that minimize losses and protect your investments[1].  Also see our blog post from last month “Why Professional Wealth Management Makes a Difference in Volatile Markets.”                                                                                             
2. Diversify Your Portfolio: Proper diversification can reduce risk by spreading investments across various asset classes, sectors, and geographies. This helps mitigate the impact of market fluctuations on your overall portfolio and achieve your financial goals and plans[2].                                                                                                                                                                             
3. Focus on Long-Term Goals: Remind yourself of your long-term financial objectives. Avoid making impulsive decisions based on short-term market movements. Keeping a long-term perspective or work with a skilled financial advisor who can help you stay committed to your investment plan[3].                                                                                                                                  
4. Stay Informed but Avoid Overreacting: Stay updated on market trends and economic news, but avoid making hasty decisions based on sensational headlines. Trust your financial plan and the advice of your manager[3].                                               
5. Regularly Review Your Financial Plan: Periodically review your financial plan to ensure it aligns with your goals and risk tolerance. Adjustments may be necessary as market conditions change[1].  You might want to read our post entitled “Start the New Year off with a Plan.”                                                                                                                                                                 
6. Manage Behavioral Biases: Be aware of common behavioral biases, such as loss aversion and overconfidence, that can affect investment decisions. Working with a manager who understands behavioral finance can help you make more rational choices[1].                                                                                                                                                                                           
7. Segment Your Investments: Consider assigning specific roles to different parts of your portfolio, such as short-term needs, long-term growth, and emergency funds. This simple financial planning exercise can help you manage risk more effectively and reduce anxiety during volatile periods[3].                                                                                                                             
8. Turn Down the Media Noise: Limit exposure to constant market updates and sensational news. Focus on your financial plan and avoid getting caught up in the daily ups and downs of the market[3].                                                                                        
9. Stay Invested: Staying invested through short-term market volatility can be crucial for achieving long-term growth. Reducing downside capture through asset allocation and diversification can help keep you invested while still seeking growth[2].                                                                                                                                                                                                             
10. Seek Support: Don't hesitate to discuss your concerns with your financial advisor. They can provide reassurance and help you stay focused on your long-term strategy[1].

These are just a few of the strategies that can help you manage the psychological challenges of a volatile market and stay on track with your financial goals and plans.

Do you have any specific concerns or questions about your investments?  

References
[1] Manage Emotions and Client Expectations in Volatile Markets
[2] Help clients stay invested amid market volatility - BlackRock
[3] Market Volatility: 10 Ways Advisors Calm Client Nerves - ETF.com
[4] http://www.etf.com/sections/advisor-center/market-volatility-10-ways-advisors-calm-client-nerves