Market ups and downs can be nerve-wracking, and with recent volatility, it’s understandable to feel uneasy. However, it’s important to step back and look at the bigger picture. Short-term fluctuations are part of investing, but over time, making smart, calculated decisions can lead to strong long-term results.
Your Portfolio Is Built for Times Like This
Whether you’ve made adjustments recently or not, your portfolio wasn’t designed to avoid volatility—it was built to withstand and survive it. Market swings are a normal part of investing, and the key to long-term success is having a strategy that works in both good times and bad. This is why portfolios are built with balance, allowing them to navigate uncertainty while staying positioned for future growth.
Timing the Market vs. Time in the Market
No one can perfectly time the market. That’s why we don’t jump in and out trying to predict every movement. Instead, we shift from one strong investment approach to another when the data supports it. Right now, the market has pulled back about 10% from recent highs, which is something that typically happens one to three times per year. This isn’t unusual. In fact, short-term drops often present great opportunities for long-term investors.
If history is any guide, many years see pullbacks of 5-15%, yet still end in positive territory. January started off well, and while we can’t predict the rest of the year, taking advantage of dips can be a smart way to increase returns.
The Strategy: Buy Low, Sell High
A common frustration among investors is seeing great returns followed by declines, making it feel like things even out. But successful investing is about buying when prices are lower—not waiting until things feel “safe” again.
If you have cash on the sidelines or money in lower-risk investments, this may be a good time to consider putting some of it to work. Instead of going all in at once, a more strategic approach could be:
- Investing 20-25% of available capital now.
- If the market declines 20% from its highs, adding another 25% of the original amount.
- If the market declines 30% from its highs, investing the rest.
For example, if you have $500,000 available:
- $125,000 invested now
- $125,000 invested if markets decline 20% from their peak
- $250,000 invested if markets decline 30% from their peak
By following this approach, you could significantly increase returns when the market rebounds.
The Trump Factor: A Bull in a China Shop
Love him or hate him, Donald Trump is back on his soapbox—and the markets are paying attention. He’s not exactly known for being diplomatic, and his style of negotiation is often loud, aggressive, and unpredictable. He’s the kind of leader who charges forward like a bull in a china shop, making big, bold claims and stirring the pot.
That being said, he’s a businessman at heart, and everything he does is aimed at securing a better deal—especially for the U.S. economy. His policies, whether they involve trade, taxes, or deregulation, have historically been market-friendly. Even if his approach feels chaotic, the end result often creates a stronger economic foundation that benefits investors.
Right now, uncertainty surrounding Trump’s influence on trade, regulation, and foreign policy is contributing to market volatility. But once the dust settles, the markets tend to adjust and move forward. If history repeats itself, what feels like instability today could turn into a strong tailwind for investments down the road.
Overcoming Emotional Investing
Our instincts often tell us to do the exact opposite of what leads to success in the markets. When prices drop, fear makes people hesitant to invest. But historically, the best time to buy is when things feel uncertain.
Investing requires discipline and a long-term perspective. This strategy isn’t about taking unnecessary risks—it’s about positioning your portfolio to benefit from the natural cycles of the market. By making calculated decisions and staying committed to the plan, you can build stronger returns over time.
If you’d like to discuss how this approach could work for you, let’s connect. Investing wisely during market dips can make a significant difference in your long-term wealth.
