Market Volatility in March
New York
CNN
March has proven to be a turbulent month for U.S. markets, with the S&P 500 experiencing two days of gains, yet still falling nearly 5% overall for the month.
Impact of Tariffs on Stocks
President Donald Trump’s tariff announcements have created chaos in the markets, causing U.S. stocks to fluctuate significantly. In the midst of this volatility, acting impulsively and selling stocks in a panic is likely to exacerbate the situation.
Understanding Market Fluctuations
Although the recent market fluctuations can seem alarming, they are more common than one might expect, asserts Jeff Buchbinder, chief technical strategist at LPL Financial. He explains, “Volatility is the cost investors pay on the journey to stronger long-term returns.”
The Risks of Panic Selling
Avoiding “panic selling” is crucial, as volatility and periodic corrections, defined as stocks dropping 10% from their peak, are natural elements of the market. Historically, the U.S. stock market has tended to rise in the long run, rewarding those who remained invested.
Expert Insights on Market Corrections
Treasury Secretary Scott Bessent expressed little concern about the recent market drops, indicating that such corrections are a healthy and normal aspect of investing. “I’ve been in the investment business for 35 years, and I can tell you that corrections are healthy,” he remarked.
Long-term Investment Strategies
While market downturns can be unsettling, especially regarding retirement accounts, maintaining composure and focusing on long-term strategies is essential. Jon Ulin, a certified financial planner, advises that emotional reactions can distort returns and that attempting to time the market often results in losses rather than gains.
Diversification as a Mitigating Strategy
A well-diversified portfolio across various asset classes helps reduce losses during volatility. Diversifying by investing in different sectors or global markets, particularly those less exposed to tariffs, can serve as a protective measure during unstable times. As Ulin notes, “Diversification acts as your portfolio’s seatbelt, ensuring safety during turbulent times.”
