Recent political developments in the United States have triggered fresh volatility across global markets. On 3 April, the S&P 500 recorded a sharp one-day drop of 4.84 percent, as markets reacted swiftly to news of the US administration’s return to Trump-era tariffs. This turbulence serves as a timely reminder: while markets can shift rapidly and unpredictably, successful long-term investing depends on staying the course.
With further volatility likely ahead, investors may feel the urge to act. But in moments like these, staying calm, focused, and aligned with your long-term goals is critical. Drawing from historical patterns and current analysis, here are three essential principles to help you weather the storm.
Read here what Partner from GSB Wealth, Mauro De Santis Bo had to say below
1. Focus on the long term
Market fluctuations are a natural and expected part of investing. From 1979 to 2023, the US market experienced average intra-year declines of roughly 14 percent, according to research from Dimensional Fund Advisors. Yet despite these drops, annual returns were positive in 37 of those 45 years (see graph below).
Source: Dimensional Fund Advisors. Data from 1979–2023.
This reinforces an important lesson: temporary declines do not necessarily lead to poor long-term outcomes. Volatility is a normal feature of investing, not a signal to abandon your strategy. The best-performing investors are often those who remain committed through both positive and challenging periods, avoiding the pitfalls of emotionally driven decisions.
2. Stay invested even when it is tempting not to
Attempts to time the market rarely succeed. Data consistently show that missing even a handful of the market’s best days can have a dramatic effect on overall returns. For example, if you had invested 1,000 US dollars in the S&P 500 at the start of 1990 and stayed invested through to the end of 2023, your portfolio would have grown to approximately 27,221 US dollars. However, missing just the five best-performing days during that period could have reduced your total return by several thousand dollars (see graph below).
Source: Dimensional Fund Advisors. Data from 1979–2023.
This underscores the importance of discipline. Staying invested, even when markets are volatile, gives you the best chance of participating in eventual recoveries, which often begin when investor sentiment is at its lowest.
3. Align your portfolio with your risk tolerance
Investing is highly personal. Your portfolio should reflect your own comfort with risk, time horizon, and financial goals. For some, an all-equity portfolio may suit long-term growth ambitions. Others may prefer a more balanced mix of stocks and bonds to smooth out volatility.
With current conditions stirring market anxiety, now is a good time to reassess whether your investments still reflect your tolerance for risk. A qualified adviser can help tailor a portfolio that balances long-term return potential with your emotional comfort.
Navigating the current landscape
Much of the current volatility stems from uncertainty surrounding the so-called Liberation Day tariff announcements in the US. Despite being framed as a one-off event, the rollout of tariffs is expected to be drawn out, with ongoing negotiations and potential exemptions, notably for the United Kingdom.
As noted in recent market commentary from financial analysts, much of the tariff-related uncertainty has already been priced into markets following several weeks of announcements. While the immediate outlook is clouded, many analysts expect the second half of 2025 to bring more clarity and potentially stronger performance, particularly if trade-related fears subside and attention shifts back to fundamentals such as earnings and GDP growth.
The Financial Times reports that President Trump has now threatened an additional 50 percent tariff on Chinese goods, which could raise total duties to more than 120 percent. China has vowed to “fight to the end,” signalling a prolonged and potentially more severe trade confrontation. Beijing has already responded by allowing its currency to weaken to its lowest level since 2023. (Source: Financial Times, 8 April 2025)
These developments echo themes we explored in our recent article, Tariff Tensions: Why staying invested beats market panic, where we discussed why resisting the urge to react to geopolitical shocks is essential to long-term investing success.
Tariff Tensions: Why staying invested beats market panic
Watching the markets this week
Monday’s trading session offered little relief following last week’s sharp market drop. While the S&P 500 staged a volatile recovery attempt, it ultimately closed down a further 0.2 percent, extending the historic losses seen after the announcement of the so-called Liberation Day tariffs. Investor sentiment remains fragile amid threats of deeper trade escalation and shifting expectations around interest rates. (Source: Financial Times)
Meanwhile, Federal Reserve Chair Jay Powell has warned that the new tariffs could have a “persistent” impact on inflation, making it more difficult for the central bank to begin easing policy. While markets are still pricing in multiple rate cuts this year, Powell and other Fed officials have pushed back, signalling that they will wait for a clearer view of inflation and growth trends before taking action.
Despite the ongoing uncertainty, the best course of action for long-term investors remains unchanged. In times of heightened volatility, reacting to short-term headlines can often lead to costly mistakes. The focus should remain on the core principles of sound investing:
- Focusing on your long-term investment plan
- Remaining invested during periods of volatility
- Aligning your portfolio with your personal risk tolerance
Final thoughts
Market cycles are unpredictable in the short term, but over time they tend to reward patient investors who stay the course. If you are concerned about how today’s headlines might affect your investments, speak with a financial adviser who understands your goals and can help you navigate uncertainty with confidence.
At GSB, we remain committed to providing thoughtful, personalised guidance, helping clients protect and grow their wealth in a disciplined, long-term manner.
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Disclaimer
This article is intended for information purposes only. It does not constitute investment advice or a recommendation. Investment decisions should always be based on an investor’s specific circumstances and made in consultation with a qualified adviser. The value of investments can go down as well as up. Past performance is not indicative of future results.
Market data cited in this article, including performance figures and intra-year market movements, is sourced from Dimensional Fund Advisors (US market data 1979–2023, S&P 500 growth simulation 1990–2023). Commentary on current market conditions and political developments, including tariffs and interest rate expectations, is drawn from Financial Times reporting as of 8 April 2025.
GSB Capital Ltd is registered with the Dubai International Financial Centre (DIFC), licence no. CL4377, and is regulated by the Dubai Financial Services Authority (DFSA) under licence no. F006321.