Navigating Market Volatility: Frequently Asked Questions

U.S. equity markets officially entered correction territory last month for the first time in 344 trading days. Tariff uncertainty feeding into economic growth concerns has been the primary catalyst behind the risk-off rotation. The 10% drop over the last month has been swift and painful, especially given that the selling pressure started from a fresh record high on February 19. However, although the economy has slowed this year as we expected, it has not stopped, and corporate America continues to deliver double-digit earnings growth. The solid fundamental footing supports our thesis that the economy is not entering a recession or a bear market. Historically tight credit spreads further support this view. Our message to investors right now is don’t panic and stay focused on the long term.

Frequently Asked Questions: Navigating Market Volatility

What is market volatility?
Market volatility refers to the degree of variation in stock prices over time. It is a natural part of investing, influenced by factors such as economic conditions, geopolitical events, corporate earnings, and investor sentiment.

Is volatility bad for my investments?
Not necessarily. While volatility can cause short term declines, it also presents opportunities for long-term investors to buy assets at lower prices. Historically, markets have recovered from downturns and continued to grow.

How often do market corrections happen?
Market corrections (declines of 10% or more) occur approximately every 1–2 years. While they can be unsettling, they are a normal part of market cycles and have historically been followed by recoveries.

Should I sell my investments when the market drops?
Selling during a downturn can lock in losses and prevent you from benefiting from market recoveries. It’s often better to stay invested and maintain a long-term perspective rather than react emotionally to short-term movements.

How can I mitigate volatility in my portfolio?

• Diversification: Spread investments across different asset classes (stocks, bonds, real estate, etc.) to potentially reduce risk.
• Rebalancing: Periodically adjust your portfolio to maintain the right mix of assets.
• Long-Term Focus: Stay committed to your financial goals rather than reacting to daily market fluctuations.

What is the impact of missing the best days in the market?
Studies show that missing just a few of the market’s best-performing days can drastically reduce long-term returns. Staying invested ensures you participate in both recoveries and long-term growth.

Are there opportunities during market downturns?
Yes! Volatility can create opportunities to:

• Buy high-quality investments at lower prices.
• Take advantage of tax-loss harvesting to offset gains.
• Rebalance portfolios to maintain strategic asset allocation

What should I do if I feel anxious about market fluctuations?

• Review Your Financial Plan: Ensure your investment strategy aligns with your long-term goals and risk tolerance.
• Talk to a Fiduciary Financial Advisor: We’re here to help you navigate uncertainty and adjust your strategy if needed.
• Stay Educated: Understanding market cycles can help reduce fear and improve decision-making.

What’s the best strategy for long-term success? Successful investors focus on:

• Staying invested through market ups and downs.
• Maintaining a diversified portfolio.
• Reassessing financial goals and risk tolerance periodically.
• Working with a trusted financial advisor to navigate uncertainty.

At Victory Wealth Partners, we understand market volatility can be unsettling, especially after two years of steady gains in stocks. Enduring the ups and downs is the price of admission for the attractive returns the stock market offers over time. It’s important to remember volatility is normal, but understanding and controlling emotions in the moment is the hard part. We are always here if you have concerns about your current investment strategy. It’s easy to overlook things when it seems like “everything is going up”. However, in a volatile market it is important to make sure your portfolio allocations all have a designated role that is based on your short-, mid-, and long-term goals. As always, we are here to help however we can. Please note Victory Wealth Partners will be moving across the street to 70 North Main Street in early May. We hope you will visit us soon in our new home! Until next month stay well.

ASHLEY ROSSER, PRESIDENT

Prior to her career in the financial services industry, Ashley earned her Bachelor of Science in Nursing from Cedarville University.

Ashley decided to make a career change from her ten years within the healthcare industry as a pediatric emergency room nurse to retirement and 401K investment planning. She joined Victory Fiduciary Consulting in 2008 after obtaining her Series 65 professional financial license and went on to earn her AIF (Accredited Investment Fiduciary) professional designation from the Center for Fiduciary Studies.

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.