After two decades of helping clients navigate the ups and downs of the financial markets, I’ve seen my fair share of wild headlines and white-knuckle volatility. But the recent plunge in the S&P 500—nearly 5% wiped out in a day after the sweeping tariff announcements on Liberation Day—has rattled even seasoned investors. Trillions in market value vanished overnight. That kind of drop shakes confidence.

If you’re feeling unsettled, you’re not alone. Times like these test even the most disciplined investors. But they also reveal something important: the value of experience and perspective.

I’ve guided clients through the 2008 financial crisis, a global pandemic, and countless policy shakeups. And through it all, I’ve noticed something powerful—while the causes of market turmoil change, the principles that help people stay grounded and make smart decisions don’t.

These are the most valuable insights I’ve gained from 20 years on the financial frontlines. You may have heard them before—they’re not flashy or new—but in moments like this, it’s the timeless principles that help us tune out the noise and stay on course.

Lesson 1: Volatility is Normal, Not an Exception

Market ups and downs aren’t a sign that something’s broken—they’re a feature, not a bug. Throughout history, the U.S. stock market has experienced countless corrections, pullbacks, and even full-blown crashes.

In fact, since 1980, the S&P 500 has seen a drop of 5% or more in nearly every calendar year—93% of the time—and a decline of 10% or more in almost half of those years, according to Fidelity. And yet, time and again, the market has recovered, regrouped, and climbed to new all-time highs.

The problem is, when we’re in the middle of the storm, it’s hard to remember the sun will come out again. That’s recency bias at work—it tricks us into thinking today’s volatility is somehow different or more dangerous than what came before.

It’s also important to understand the difference between volatility and risk. Volatility is temporary fluctuation; risk is the possibility of permanent loss. Long-term investors don’t get derailed by short-term volatility—they stay focused on what really matters: time in the market, not timing the market.

Lesson 2: Time in the Market Beats Timing the Market

In volatile times, it’s tempting to think you can outsmart the market—sell before it drops, buy back in when things “feel” safer. But the data tells a different story: successful market timing is nearly impossible, even for the pros.

Take the past 20 years. According to JPMorgan, seven of the market’s 10 best days happened within just two weeks of the 10 worst. That means if you bailed during a downturn—even briefly—you likely missed the bounce that followed. A striking example happened in March 2020: the market’s second-worst day of the year was immediately followed by its second-best.

Over time, those missed days add up. If you had invested $10,000 in the S&P 500 at the start of 2005 and stayed the course through 2024, you’d have over $71,000. But if you missed just the 10 best days, that return is cut in half. And if you managed to miss the best 60 days, your $10,000 would have shrunk to less than $5,000.

This is the power of compounding—and the danger of emotional decision-making. Fear-driven moves may feel safe in the moment, but they often come at the cost of long-term growth. Staying invested, even when it’s uncomfortable, is how real wealth is built.

Lesson 3: Market Declines Are Temporary, But Market Growth Is Enduring

Market downturns always feel different in the moment—more urgent, more dangerous, more permanent. But history shows us otherwise. While the causes may vary, the pattern remains the same: markets fall, and markets recover.

The most recent bear market, which began in late 2021 amid rising inflation, global conflict, and supply chain disruption, took about 18 months to rebound, according to Morningstar. In contrast, the COVID crash in March 2020—one of the steepest single-day drops in history—snapped back in just four months, making it the fastest recovery in 150 years.

Even the most severe events, like the Great Depression’s 79% decline, eventually gave way to long-term growth. The same is true for Vietnam, Watergate, the dot-com bust, and the 2008 financial crisis. These moments were significant—but temporary.

According to Hartford Funds, the average bear market sees a 35% drop, while the average bull market delivers a 111% gain. And over the past 94 years, markets have spent 78% of the time climbing higher.

In other words, market declines are inevitable. But staying invested in a well-diversified portfolio—one aligned with your goals and risk tolerance—is what allows you to capture the full upside when growth returns.

Lesson 4: Your Reaction to Volatility Matters More Than the Volatility Itself

Volatility is inevitable—but how you respond to it can make or break your long-term success. During turbulent markets, it’s easy to let fear take the wheel. The headlines feel louder, the losses more personal, and the urge to “do something” can be overwhelming. But the most common emotional traps—panic selling, chasing performance, abandoning a plan—often lead to costly mistakes.

Staying grounded requires intention. That might mean revisiting your goals, limiting media exposure, or leaning on a trusted advisor for perspective. Techniques like mindfulness, journaling your thoughts, or simply taking a break from checking your portfolio can also help you stay calm when markets are anything but.

Most important, though, is having a written financial plan. It acts as an anchor, reminding you of your long-term purpose when short-term emotions run high. Volatility may be out of your control—but your reaction to it is not.

Lesson 5: Diversification Works, Just Not Always When You Want It To

Diversification is one of the most effective tools in an investor’s toolkit—but it doesn’t always feel like it’s working in the moment. When markets are in free fall, it can seem like everything is dropping at once. That’s because during times of crisis, correlations between asset classes often increase, making even a well-diversified portfolio feel like it’s not offering much protection.

But the true value of diversification isn’t about short-term performance—it’s about long-term resilience. Spreading your investments across different asset classes, geographies, and sectors helps smooth out the ride over time, reducing the impact of any one holding or market event.

For example, during the 2008 financial crisis, portfolios with exposure to high-quality bonds experienced far less drawdown than those fully invested in stocks. Similarly, in 2022, energy and value stocks helped offset losses in other parts of the market.

Diversification won’t eliminate losses, but it can help limit the damage—and that can make all the difference when staying invested matters most.

Lesson 6: Financial Planning Beats Investment Management

When markets are volatile, it’s easy to fixate on returns. But over the long run, your financial success is driven more by the strength of your plan than the performance of your portfolio. A well-built financial plan connects your money to your life—your goals, your values, your timeline—not just to market benchmarks.

Instead of chasing returns, focus on the things you can control: maintaining a strong cash reserve, saving diligently, and making sure your investments align with your time horizon and risk tolerance. These elements create the stability you need to weather uncertainty without derailing your progress.

Volatility isn’t just something to endure—it can actually work in your favor when you have a plan in place. One way to make that happen is through systematic rebalancing: regularly trimming investments that have grown beyond their target and adding to those that are temporarily undervalued. This disciplined process turns market fluctuations into opportunities, not setbacks.

It’s a strategy I’ve built into my investment management process for the past 20 years. Rebalancing—typically done annually—helps ensure your portfolio stays aligned with your goals and risk tolerance, even as markets shift. Over time, it keeps your plan on course and your investments working smarter, not just harder.

Lesson 7: News and Noise – Learning What to Ignore

In times of market volatility, the financial media shifts into overdrive. Bold headlines, urgent tickers, and endless commentary can make it feel like the sky is falling. But most of what’s being broadcast isn’t designed to inform—it’s designed to attract clicks and keep you tuned in.

The danger is that it’s easy to mistake noise for insight. Prediction-focused content—forecasts about where the market is headed next—can be especially harmful. No one can consistently predict short-term market movements, yet these narratives often fuel fear-based decisions that derail long-term plans.

Instead, focus on filtering for information that’s relevant to your financial goals. Limit exposure to 24/7 financial news, and seek out trusted sources with a long-term perspective. Creating healthy media habits not only protects your peace of mind—it helps you stay grounded in what actually matters: your plan, your time horizon, and your future.

Navigating Market Volatility with Confidence

The lessons above are reminders that uncertainty is part of the journey, not a sign that something’s gone wrong. Successful investing is built on perspective, patience, and a clear plan.

Instead of reacting to headlines or daily portfolio swings, focus on what you can control: your spending, savings, and long-term goals. Remember, investing is a marathon, not a sprint—and staying the course matters more than perfect timing.

If recent market swings have you feeling unsettled, resist the urge to refresh your portfolio. Instead, return to your financial plan—that’s your true guide through uncertain times. And if you don’t have a plan in place, now is the time to create one. Align Financial is here to help you build a personalized strategy designed to weather the market’s ups and downs and keep you moving confidently toward your goals. Reach out today to get started.