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An uncertain stock market can cause doubt, but stay the course | Opinion

The stock market is doing exactly what it’s supposed to do.
I know it’s hard to feel calm when news of escalating tariffs and grim financial forecasts make the headlines. When the market drops, it directly impacts the financial goals you have tied to your assets in the market.
But from our perspective at CapWealth, the market is performing as it should. The market gets volatile when uncertainty is high. And there is no shortage of uncertainty at the moment.
The possibility of an escalating trade war, mass federal firings and other unsettling events are rippling throughout the broader economy. Even companies that are not directly affected by the volatility may hit pause and reassess their plans for the near future.
Where does that leave the individual investor? We talk about businesses, sectors, and industries, but these things are all made of people. The market’s performance reflects our collective sentiments about the future. And if we don’t know what is going to happen from day to day, then neither will the stock market.
Last year’s stock market was “frothy,” meaning that valuations grew on enthusiasm for the future. People were willing to invest in speculative assets and pay a high cost for stocks with low earnings. They hoped those speculations would pay off, and the real earnings of those high-flying stocks would catch up with their valuation.
Now? Investors are taking the gains where they can find them. We look for a “new normal,” in a world with sudden, constantly changing, and contradictory headlines.
Unfortunately, this is what volatility looks and feels like. The market is just reflecting that feeling.
It’s natural to want to pull your money out of the market. But it’s not what I would recommend. Your individual goals — saving for retirement, home renovations, or your children’s education — exist on a completely different timeline than the financial news of the hour. When the entire market is selling, that creates buying opportunities for investors.
Nobody, not even the most successful portfolio managers, can time the market. No one knows the exact, correct moment to sell and buy. But over a long enough time frame, the most successful investors tend to be the ones who stay the course through calm and volatile markets.
Finally, one of the best ways to stay calm in a volatile market is to diversify. Find sectors, companies, and asset classes that don’t behave like the broader markets. These will act like an anchor for your portfolio, limiting the pain of a market drop. This takes a great deal of research, and we are always happy to talk to you about an investment strategy that makes sense for your personal, long-term goals.
In the meantime, expect the bumpy ride to continue. Participating in the stock market means opening yourself to risk. Risk and return go hand-in-hand. The more risk you take, the more return you should earn. But it takes time and discipline. It is the flip side of the high earnings potential and the rewards of compounding interest.
If it makes you feel worried, you’re in good company. But volatility does not last forever. This too shall pass.