Developing a Mindset to Deal With Market Volatility
San Diego, CA - March 5th, 2025
Author: Andrew Mescon
Chief Executive Officer
In uncertain market environments like the one we experienced this past week – driven at least partially by decisions from the White House – it is often tempting to allow politics to creep into thinking about investment decisions and financial planning. It is understandable. Anytime there is a change in administrations, and particularly when that change represents a shift in the political party in charge, the landscape shifts. This past week, for instance, saw both new tariffs imposed on trading partners and a number of policy pronouncements during President Trump’s address to a joint session of Congress that inarguably have economic – and, therefore, market – implications.
So, what is an investor to do? At Ballast Rock Private Wealth, we know that this current market environment no doubt has some of our clients and other investors concerned. While every financial situation is different, we think some broad guidance around mindset and approach would help many investors in markets like this one:
Maintain Perspective. Market returns vary year to year and are driven by a number of factors. While this week’s headlines suggested the market selloff was driven by tariffs, just a week prior similar selloffs were attributed to weaker tech earnings. Next week, gains and losses will be credited or blamed on other factors. Day-to-day moves, and even those happening over the course of several weeks are not uncommon. Indeed, they are a part of investing, which always involves risk.
Be Vigilant. In our opinion, there is no worse advice than “do nothing” in uncertain environments. For one thing, it ignores the real anxiety investors face over their wealth preservation. Second, depending on the severity of moves, a review of asset allocations with your financial advisor is almost always appropriate. Take your cash position, for instance. Depending on risk tolerance, timeline, and other factors, it might be wise to either keep more cash on the sidelines or, inversely, buy into the market weakness for the long term. Again, every investor’s situation is different, so it is good to have a conversation specific to your family’s individual needs and upcoming life events.
Remain Diversified. The headlines around market activity invariably focus solely on equities. Volatility in equity markets are a reminder that, while stocks may be down, you can incorporate portfolio protection in other areas, like fixed income, private assets, alternative investments, and even options strategies.
Separate Policy from Politics. Elections have consequences, and the early months of any administration bring changes. The media tends to feed on rhetoric, but the real implications are in the policies that are adopted and that are sustained. Tariffs are a good example. One doesn’t have to flip through tweets on X for long to see a raging political debate. However, there are key questions around the size and duration of tariff policies that will have the real economic and market impact. Avoiding the political noise and focusing on the policy implications gives investors a clearer head when it comes to making decisions. True Diversification
Everybody’s needs are unique, and each investor needs to fully understand both the benefits and the risks of allocating to alternatives before incorporating such strategies in their investment strategy. If you are interested in learning more about our truly diversified approach to asset allocation, portfolio construction and investment management please click on the link below and one of our team will contact you to discuss your specific investment objectives.
