Equity markets offer investors numerous opportunities to build wealth, but they also entail significant risks, including market volatility. While stock prices may rise and fall for various reasons, extended periods of uncertainty can roil markets and prompt investors to make rash financial decisions based on emotions rather than facts.
The current surge in volatility is driven, in large part, by uncertainty over the Trump administration’s tariff policies, the retaliatory measures of other countries and the broader economic impact trade tensions may have across the globe. These wide swings and sharp declines can evoke intense feelings of fear, anxiety, greed, and overconfidence and trigger a strong desire to take drastic action, too often without consideration for one’s unique needs and goals.
Successful investors recognize that short-term influences and longer-term historical trends drive market movements. They also understand that market volatility is both normal and expected, and historically, periods of deep decline have been followed by strong recoveries. When market losses mount, they do not make emotional, knee-jerk decisions. They stick to their investing plans, and, depending on the assets in their portfolios and their time horizons, they instead view market dips as an opportunity to buy. Of course, everyone’s situation is unique.
While it is natural to feel concerned during the current market cycle, there are steps investors can take to prepare themselves to ride out the storm and stay afloat.
Assess emergency savings and liquid reserves. Generally, you should have enough cash on hand to cover six months of your required expenses, including rent and mortgage payments, utilities, insurance premiums, child care, tuition and groceries.
Rebalance your Investment Portfolio. Because the mix of assets in your investment portfolio tends to shift over time, make a point to assess your current allocations to ensure they continue to align with your goals, timeline and tolerance for risk.
Stick to Your Investment Plan. Consistent investing is key to helping you ride out market dips and achieve your longer-term financial saving goals. Despite past market pullbacks and recessions, stocks have continued to rise over the long term.
Look for Tax-Saving Opportunities. Market pullbacks and bear markets provide investors with opportunities to reduce their tax liabilities. For example, you may use investment losses from the sale of depressed stocks to offset capital gains and some ordinary income, subject to specific rules. Any unused losses in the current year may be carried forward into future tax years.
Sticking to a long-term investment strategy can be challenging, particularly in the face of shifting economic factors and significant market fluctuations. However, maintaining diligence and staying on course may be best accomplished with the support and insight of experienced financial advisors who understand how a diversified investment portfolio can help you meet your individual goals and time horizons. Their insight and experience can also help to reduce the impact of market volatility and prepare you and your investment plan for what comes next.
About the Author: Scott Montgomery is a director and financial planner with Provenance Wealth Advisors (PWA), an Independent Registered Investment Advisor affiliated with Berkowitz Pollack Brant Advisors + CPAs and a registered representative with PWA Securities, LLC. He can be reached at the firm’s Ft. Lauderdale, Fla. office at (954) 712-8888 or info@provwealth.com.
Provenance Wealth Advisors (PWA), 200 E. Las Olas Blvd., 19th Floor, Ft. Lauderdale, Fla. 33301 (954) 712-8888.
Scott Montgomery is a registered representative of and offers securities through PWA Securities, LLC, Member FINRA/SIPC.
This material is being provided for information purposes only and is not a complete description or a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. There is no guarantee that these statements, opinions or forecasts provided herein will prove correct.
Any opinions are those of the advisors of PWA and not necessarily those of PWA Securities, LLC. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of PWAS, we are not qualified to render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional. Prior to making any investment decision, please consult your financial advisor about your individual situation.
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Posted on April 11, 2025