Let me tell you what really matters, and it’s not whether the April showers brought May flowers in your investments. May brought flowers, yet we’re still recovering from the uncertainty of April.
What really matters in investing is staying focused on the long term and avoiding inevitable market fluctuations during those inevitable times of uncertainty.
Uncertainty causes turbulence in the markets
Market fluctuation can be affected by factors such as natural disasters, interest rates. government regulations and consumer confidence. When uncertainty clouds market forecasts, that economic uncertainty can lead to a recession. Widespread uncertainty throughout the world markets, in general, makes business leaders uncomfortable. They don’t know what conditions they will be operating in from one week or month to the next. When policies out of Washington keep changing, companies tend to reduce spending and avoid making major moves until conditions become more stable — more certain.
Consumers also pull back in the midst of uncertainty. They delay making major purchases because they don’t know if they will still have jobs, what the mortgage rates will be or what their investment portfolio will look like in a few months. When consumers and companies pull back on spending, it creates a downturn in the gross domestic product (GDP), leading to a recession.
How you can benefit from economic uncertainty
As investors, we can take advantage of market uncertainty and turn it into opportunity.
Many people panic in response to a market downturn and sell assets — bailing out of the market. I have learned that many investors do this because it makes them feel better, at least for a few minutes. It makes them feel like they are taking action to counteract the potential losses the fluctuating markets might create. However, this is not a winning strategy! Selling investments when they’re down locks in your losses.
When other investors panic-sell — and there will always be investors who do this — it drives down the prices of stocks and other assets. That makes them potentially good investments for investors who are staying calm and focused.
1. Contrarian selling
Warren Buffett, the CEO of Berkshire Hathaway, said, “Be fearful when others are greedy, and be greedy when others are fearful.” This philosophy, known as “contrarian selling,” suggests that investors who understand the underlying value of the assets being sold can take advantage of these situations by buying low. The idea is to do the opposite of — what is contrary to — what most people do: buy assets when there is widespread pessimism in the market and sell when there is excessive optimism. It’s hard to argue with a strategy that has contributed to Buffett’s net worth of $152.7 billion!
2. Dollar-cost averaging
Another approach we take with some clients is to have them invest in stocks or funds at regular intervals. This means they spread out their purchases over time, as opposed to buying assets in lump sums. This strategy is called dollar-cost averaging. The benefit of investing smaller amounts over time is that you will buy when prices are low and also when they are high, which balances out your average purchase price. Also, you will be investing when the market or a stock value is down, which is when you can potentially get the best deals.
Dollar-cost averaging removes emotion from your investing decisions and keeps you focused on the long-term game.
Stay the course — always!
History shows us that, without question, you will have a much better financial outcome if you stay the course and ignore market fluctuations instead of bailing out of the market.
Consider that the average annualized return for the S&P 500, from 1928 to the first quarter of 2025, was 9.96 percent. Adjusted for inflation, the real average annualized return for the same period is 6.69 percent. Now, these numbers reveal final outcomes; what they don’t show, at first glance, are the ups and downs the markets took to end up as positives. The markets have endured recessions, depressions, world wars, devastating natural disasters and many other significant upheavals over the past century — and always came out ahead.
This is an important lesson for all investors: Staying the course is always the best strategy.
Guiding our clients through the ups and downs
For the past 27 years — almost three decades — I have worked to protect our clients from making the mistake of panic-selling. Those who panic and then sell during a downturn end up losing money. Those who ignore the fluctuations end up benefiting from the upturns that always follow the downturns. Those who bail out miss the upturns when the markets recover.
I want to encourage you to have confidence in the long-term performance of the markets and in the financial plan we have designed to guide your future. When you feel uneasy amid news of the constantly changing tariffs, as well as wars, trade relations with China and other issues, don’t make any changes to your investments. The markets will recover; they always have. Even though those upheavals make you feel uneasy and pessimistic right now, today, please remember that staying the course will enable you to enjoy financial freedom for the rest of your life.
How well does your advisor guide you through the uncertain times? How well has he or she managed the growth of your portfolio’s value since you’ve been working together? Does your advisor focus on how you can feel 10 years from now, as opposed to the next 10 minutes?
Guiding you to stay the course over the long term is just one area in which an advisor can make a significant difference in your financial well-being and confidence. Unfortunately, some advisors are either conflicted in some way about the right strategy, or they are panicking themselves.
At FORM Wealth, the thoughtfully designed policies, procedures and committees we have in place enable us to work together to serve your best interests and to remind one another about what really matters — the future well-being of our clients as they look to retirement. If you feel your advisor does not have the level of confidence that is necessary, especially during times of uncertainty, reach out to us.
And if you’re one of our clients, know that we do the job you need us to do every single month.
