What to Do When Markets React in Uncertain Times

July 29, 2025

Financial headlines have a way of setting the tone for our day, especially when the world feels tense. Each morning, you might glance at your phone or turn on the news and see new stories about global conflicts or economic shocks. These headlines do more than fill airtime—they shape the way people think about their money and future.

Here’s what many Americans are seeing right now:

• Reports of missile launches in the Middle East are raising concerns about global security.
• Oil prices are surging, making it clear that energy markets affect every part of the economy.
• Stock indexes are swinging sharply, with investors and traders reacting to every new update and headline.
• How will the trade tariffs affect the economy and stock market

For investors, business owners, and retirees, these events feel personal. The steady stream of unsettling news can quickly stir up worry. Many people start to ask themselves tough questions.

• Should I make changes to my investments or hold steady?
• Is my retirement nest egg at risk if the markets keep dropping?
• Will this turmoil affect the company I run or the people who work for me?
• Am I overlooking a threat that others see coming?

Uncertainty is a test for everyone, no matter how experienced or prepared. When markets start reacting, the urge to take action can become overwhelming. This is when emotion can lead people astray. History has shown that costly financial mistakes often happen during periods of stress, not because the facts have changed, but because fear can cloud even the best judgment.

A rushed decision made in a moment of anxiety may do more than affect your next account statement. It can influence your ability to enjoy the lifestyle you have built, your family’s sense of security, and the future you want to create for others.

The biggest challenge is not just reading the headlines or following the market numbers. The real task is deciding whether to respond at all, and if so, knowing how to respond in a way that is thoughtful and aligned with your goals. A steady mindset, a clear plan, and the discipline to stay focused during uncertainty are what truly help shape your financial future.

Understanding Market Reactions: What Drives Volatility?

Markets are more than numbers on a screen. They are a living reflection of what is happening in the world and how people feel about it. When something significant happens, whether it is political, economic, or emotional, you can often see it almost immediately in the markets.

What causes all these ups and downs? Here are the most common drivers:

• Geopolitical Risks: Major world events have the power to move markets within minutes. Wars, military conflicts, sanctions, and terrorist attacks all create uncertainty. When headlines break about missile launches or threats in important regions, investors start to question the future.
  
  That worry often gets priced in quickly. This is not just happening on Wall Street. The ripple effect can touch every corner of the world, from Florida’s retirees to California’s tech entrepreneurs.
• Commodity Prices: Oil and gas are the lifeblood of the global economy. When their prices change, the impact reaches far beyond the gas pump. Energy costs influence how much it takes to make goods, transport them, and keep the lights on.
  
  An unexpected jump in oil prices can squeeze profits for businesses and take a bite out of household budgets. As a result, everyone becomes just a little more cautious.
• Interest Rates: Central banks, including the Federal Reserve, have enormous influence over the cost of borrowing. A decision to raise or lower rates can send waves through stocks, bonds, and even real estate prices.
  
  If rates go up, borrowing becomes more expensive, so businesses and consumers might pull back on spending. When rates fall, borrowing is easier and money starts to flow more freely.
• Inflation Trends: Everyone notices when prices start to climb. Inflation reduces your buying power, which means your money does not go as far as it used to.
  
  Companies also feel the pinch because their costs go up, and sometimes they cannot raise prices fast enough to keep up.
  
  On the other hand, deflation or falling prices can slow the economy down because people wait to make purchases, expecting even lower prices ahead.
• Consumer Sentiment: The mood of the public is a powerful force. When Americans feel positive about their jobs, savings, and prospects, they spend more. That keeps businesses healthy and markets humming.
  
  When confidence slips, whether because of layoffs, political tension, or bad news, people pull back and the economy can slow quickly.
• Algorithmic Trading: Technology now plays a major role in how markets react. Computers and algorithms can process news headlines and market data in milliseconds.
  
  If a story breaks or data changes, automated systems might buy or sell huge amounts almost instantly. Sometimes, this can make swings in the market even bigger and more abrupt than in years past.

Example in Focus:

Think back to the 1970s. The oil shock hit hard and led to gas lines, inflation, and a tough market environment for years. That was a time when the United States relied heavily on foreign oil, and disruptions overseas sent shockwaves through every part of the economy. If you look at today, things appear different in some ways.

The United States now produces and exports more energy. Supply chains are more diverse, and technology offers better tools for managing risk. Even with these advances, market volatility can still arrive suddenly.

We saw this during the COVID-19 pandemic, when a virus changed the world almost overnight and markets responded with historic swings. Recent geopolitical tensions have shown how quickly investor sentiment can change.

What to Remember:

• Volatility is part of investing.
• The biggest market moves are often the result of emotion and headlines, not always the underlying value of companies.
• In the long run, fundamentals and investor behavior matter much more than any single day’s news.

How Markets Have Historically Responded to Global Events

When a global crisis hits, it is normal for market drops to feel overwhelming. You might see headlines about stocks falling or hear conversations about retirement accounts shrinking overnight. These reactions are real and can stir up worry for anyone invested in the market. However, the story the data tells is different. It is a story of resilience, patience, and recovery.

Let’s look at some real examples of how U.S. markets have responded to major events:

Key Takeaways:

• Most sharp declines are followed by recovery, often within six to eighteen months.
• Headlines often focus on the fear and immediate impact, but over time, the value of solid investments can return.
• Missing out on a rebound by leaving the market or selling at the wrong time can be far more damaging than holding steady.

A Closer Look

Take the COVID-19 crash as an example. Markets fell dramatically in just a few weeks. Many people were worried about the future and some decided to sell their holdings. Within a year, the S&P 500 had not only recovered but reached new highs. A similar story played out during the financial crisis in 2008 and after the Brexit vote in 2016.

Even in periods of conflict in the Middle East, while immediate reactions are negative, the markets have shown a pattern of positive returns over the following year. This pattern reflects the ability of markets to adjust, for investors to find new opportunities, and for economies to adapt.

What This Means for Investors

Staying invested and focused on your long-term goals has historically rewarded patience. Market turbulence can test your resolve, but the data consistently shows that resilience, not panic, leads to better outcomes. Keeping perspective and resisting the urge to react to every headline is one of the most important skills for anyone who wants to build lasting wealth.

What Really Drives Long-Term Returns?

When the market makes a big move, the headlines can be hard to ignore. Sharp declines or sudden rallies often feel urgent, but history shows that most wealth is not built in a few weeks or even a single year. Instead, it grows steadily over decades. Understanding the forces behind this long-term growth can help you focus on what matters, even when short-term moves are dramatic.

The Four Key Drivers

1. Earnings Growth: Companies that consistently grow their profits tend to become more valuable over time. When businesses deliver higher earnings, investors are usually rewarded with rising stock prices and dividends.
   
   Example: Last quarter, S&P 500 companies reported earnings growth of twelve percent. This happened even as headlines focused on global uncertainty, showing the power of underlying business strength.

2. Consumer Confidence: People tend to spend and invest more when they feel good about their financial situation and job prospects. Strong consumer confidence supports business revenue, encourages hiring, and helps drive economic growth.
   
   Example: In 2020, after Americans received stimulus checks, consumer spending surged. This boost in confidence and spending played a major role in the market’s rapid recovery following the pandemic shock.

3. Interest Rates: Interest rates, set by the Federal Reserve and other central banks, determine how easy or expensive it is to borrow money. When rates are low, borrowing and investing become more attractive for both consumers and businesses. High interest rates, on the other hand, can slow growth by making loans and mortgages more costly.
   
4. Inflation Management: A stable level of inflation creates a supportive environment for investing. If prices rise too quickly, purchasing power and profits are eroded. If inflation is under control, companies and consumers can plan for the future and invest with more confidence.

Real-World Perspective:

• After the market crash in 2020, consumer spending rebounded much faster than many analysts predicted. At the same time, large technology companies reported impressive earnings growth, which helped pull the broader market higher. These forces worked together to create one of the quickest and most robust recoveries in recent history.
  
  
• Periods of high inflation tell a different story. When prices are rising quickly, some investments do better than others. Value stocks, companies with steady profits and reasonable prices, have historically performed better than high-growth stocks in these environments. Commodities, like oil and gold, also tend to provide a buffer against inflation since their prices often rise with the cost of living.
  
  Michael Landsberg, Chief Investment Officer at Landsberg Bennett Private Wealth Management, recently addressed this point in a discussion with Reuters in May. He noted that gold remains underowned by many investors, even though it continues to serve a valuable purpose in the current environment.
  
  Landsberg explained that his team views gold as one of their larger positions and expects it to keep working well as part of a diversified portfolio. In his words, “Gold has been under owned, still under owned by many people. It’s one of our larger positions. We think that [it] continues to work in this environment of [the] unknown”.
  
  This view highlights the traditional strength of gold. Unlike stocks, which can be hit hard by inflation or sudden global shocks, gold has a long history of holding its value when other investments falter. It offers a measure of stability and can help manage risk when the outlook is unclear.

While market swings grab attention, long-term returns are shaped by real economic factors. Focusing on earnings growth, the mood of consumers, the path of interest rates, and careful inflation management helps investors stay on track. These drivers may not make headlines every day, but they are the foundation of lasting wealth.

Behavioral Traps: How Investors Typically React and Mistakes to Avoid

Emotions can influence financial decisions more than many people realize. When markets become volatile, it is common for even experienced investors to feel nervous or hopeful—and that emotional response can lead to mistakes that hurt long-term results. Understanding these common behavioral traps is the first step to avoiding them.

Four Common Behavioral Biases

1. Panic Selling: This happens when investors see markets dropping and quickly sell their holdings at a loss. The fear that things will keep getting worse often pushes people to act. Unfortunately, selling during downturns locks in losses and makes it harder to recover when markets bounce back.
2. FOMO (Fear of Missing Out): FOMO can drive people to buy into the market after prices have already risen, hoping not to miss future gains. The risk here is buying high, only to see prices correct or fall, which leads to losses and disappointment. Chasing trends rarely pays off in the long run.
3. Recency Bias: This bias leads investors to believe that the most recent market trends or events will continue far into the future. For example, after a sharp drop, some might assume more drops are inevitable, or after a long rally, expect prices to rise forever. Both assumptions can result in poor decisions.
4. Loss Aversion: Most people dislike losses more than they appreciate gains. This focus on avoiding loss can lead to selling out of fear or holding onto losing investments for too long. It often causes investors to overlook long-term opportunities and potential for growth.

Mistakes by Investor Type:

• Affluent Retirees: Some retirees look for comfort in cash during turbulent times, thinking that moving everything to cash is the safest choice. While it may feel secure in the short term, this move can limit income growth and leave retirement savings exposed to inflation.
  
  Read: Where should retirees put their money during volatile markets?
  
  Over time, rising prices can quietly erode the value of those “safe” assets, especially if they are not earning enough to keep up with living expenses. Another common mistake is focusing only on avoiding losses.
  
  Retirees sometimes put too much into low-yield investments like money market funds or short-term bonds. While these can provide stability, relying on them exclusively means missing out on the potential for long-term growth.
  
  With life expectancies increasing, ignoring the need for continued growth can make it more difficult to maintain the lifestyle you want and cover rising costs, such as healthcare.
  
• Working Professionals: Many working professionals feel pressure to outsmart the market during periods of uncertainty.
  
  Attempting to time the market based on breaking news or social media tips rarely pays off and often results in buying high and selling low. Without a clear investment plan, it is easy to make impulsive trades that do not fit your long-term goals.
  
  Some professionals react to anxiety by pausing or reducing their retirement contributions. Skipping a few contributions or borrowing from retirement accounts might seem harmless, but over time these gaps can add up and make it harder to reach future milestones.
  
  Sticking with a consistent savings plan, even when the market is rocky, helps build lasting wealth and resilience.
  
• Business Owners: For business owners, confidence in their own company is natural, but sometimes this leads to over-investing in a single business or industry. When too much wealth is tied up in one place, any setback—whether industry-wide or company-specific—can have an outsized effect.
  
  Neglecting to build a portfolio outside of the main business is another frequent oversight. Diversifying investments helps protect against unexpected business challenges and creates additional streams of growth or income.
  
  Some owners also delay making important investment decisions, waiting for more certainty. While caution is understandable, waiting too long can mean missing tax advantages or growth opportunities that would benefit both the business and personal finances.

What to Do (and What Not to Do) When Markets Are Reacting

When the world feels uncertain, the urge to take action is strong. Many investors want to make moves just to feel more in control. However, the most effective steps are often measured, thoughtful, and grounded in your plan—not driven by emotion or the latest headlines.

What You Should Do

• Pause and review your financial goals. Ask yourself: Have your life circumstances, timeline, or risk tolerance changed? Revisit your plan and make sure it still fits your needs.
  
  
• Check your asset allocation. Confirm that your portfolio remains diversified across asset classes, sectors, and geographic regions. A balanced mix helps manage risk and smooth out returns over time.
  
  
• Maintain cash for near-term needs. Keep enough cash to cover emergencies and the next 12 to 24 months of living expenses. This prevents forced selling during a downturn and gives you flexibility.
  
  
• Consider rebalancing your portfolio. If some investments have grown or dropped more than others, shift back to your target mix. Rebalancing is a way to systematically buy low and sell high, without overhauling your entire strategy.
  
  
• Take advantage of tax strategies. Review your accounts for opportunities such as tax-loss harvesting, which can help offset gains elsewhere. Consult a financial professional or tax advisor to make sure you are maximizing available benefits.
  
  
• Schedule a portfolio review. Meet with a financial professional to discuss your current situation. Regular check-ins help you adjust to changes and keep your plan on track.
  
  
• Keep investing steadily. If you are making regular contributions to retirement accounts or investment plans, stay consistent. Investing through different market cycles often builds more wealth than trying to pick perfect entry points.
  
  
• Review your spending and saving. In volatile times, consider tightening your budget or delaying big purchases if needed. This adds extra security and can free up resources for future investment opportunities.
  
  
• Educate yourself. Take time to learn more about your investments, how markets work, and why staying patient pays off. Knowledge helps reduce fear and leads to better decision-making.
  
  
• Focus on long-term goals, not short-term headlines. Remind yourself why you invested in the first place. Staying committed to your objectives can make it easier to tune out noise and avoid knee-jerk reactions.

What You Should Not Do

• Do not make decisions based on panic, social media, or headlines. Emotional trades rarely lead to good results. Take a step back before making any moves.
  
  
• Do not try to time every swing in the market. Consistently predicting short-term moves is nearly impossible. Most successful investors focus on long-term trends and let their strategy work.
  
  
• Do not ignore your financial plan. Abandoning a carefully constructed plan because of temporary volatility can set back your progress. Trust the process that you and your advisor put in place.
  
  
• Do not over-concentrate your investments. Avoid putting too much into a single stock, sector, or type of asset, no matter how promising it seems. Diversification is a proven way to manage risk.
  
  
• Do not abandon the market altogether. Staying on the sidelines means missing the eventual recovery. Some of the best returns often happen just after the worst days.
  
  
• Do not withdraw retirement savings early unless absolutely necessary. Early withdrawals can create tax penalties, reduce long-term growth, and jeopardize your retirement security.
  
  
• Do not ignore fees or costs. In a turbulent market, high fees can eat away at returns even faster. Review your investment costs and look for opportunities to save.
  
  
• Do not make drastic changes without professional advice. Big portfolio shifts or abandoning your investment approach should only happen after careful review with a qualified advisor.
  
  
• Do not let fear or greed drive your actions. Both emotions can cloud your judgment and lead to mistakes that are hard to recover from.

Quick Reference Table:

When in doubt: Take a breath, review your plan, call your financial advisor.

The Role of a Financial Plan: Building for Uncertainty

A strong financial plan is more than a stack of papers or an online spreadsheet. It is a living, evolving strategy that helps you face both calm periods and turbulent markets with confidence. Instead of reacting to headlines, a well-crafted plan gives you a reliable path to follow, even when the outlook feels cloudy.

Essential Features of a Resilient Financial Plan

• Defined goals: Start by knowing exactly what you want your money to do for you. Your goals might include a secure retirement, funding your children’s or grandchildren’s education, supporting a cause that matters, or building a legacy for future generations. Write down each goal and review them regularly. Life changes, and your plan should grow with you.
  
  
• Custom asset mix: A thoughtful asset mix brings balance to your investments. This might include stocks for long-term growth, bonds for stability, cash for flexibility, real estate for diversification, and alternatives for extra opportunities. The right mix depends on your age, timeline, and risk comfort level. As your needs shift, so should your investment blend.
  
  
• Regular reviews: Set aside time every year to review your plan, or do it sooner if you experience big life changes such as a career move, marriage, new child, divorce, or the sale of a business. Regular reviews let you spot problems early and make informed adjustments, rather than reacting in panic later.
  
  
• Liquidity buffer: Having a pool of cash or easily accessible funds can make all the difference during emergencies. This liquidity buffer might cover anything from medical bills to surprise repairs or a temporary job loss. By keeping a cushion of cash, you avoid being forced to sell investments at a bad time.
  
  
• Flexible withdrawal plan: Especially for retirees, a plan for withdrawals is essential. Decide how much you will take from your accounts each year and from which types of accounts. In times when the market drops, you might reduce withdrawals from stocks and rely more on cash or bonds until things recover. Flexibility helps you protect your portfolio from selling at a loss and gives you options when conditions change.

Should You Adjust Your Portfolio? Key Questions to Ask

Not every market dip calls for action. Use these questions to guide your thinking:

1. Has my time horizon shifted? Example: Nearing retirement or a major purchase?
   
   
2. Have my cash needs changed? Planning for new expenses, healthcare, or emergencies?
   
   
3. Is my risk tolerance the same? If losses keep you up at night, it’s worth reviewing.
   
   
4. Are my goals still clear and realistic? If not, it’s time for a checkup.
   
   
5. Has my asset allocation drifted? Markets move—portfolios do too.

Portfolio Review Checklist:

• Update your list of financial goals
• Review your age, stage of life, and income sources
• Check your mix of investments (stocks, bonds, cash, alternatives)
• Assess cash on hand (do you have 12–24 months for living expenses?)
• Schedule your next review (annually or after big life changes)

U.S. Investment Vehicles and Considerations in Volatile Times

Having the right types of accounts can make a big difference when markets are unpredictable. Choosing the right vehicle for your investments is just as important as picking the investments themselves. Each account type has its own set of benefits and potential drawbacks, especially during times of volatility.

Common Accounts:

• 401(k): A 401(k) is one of the most common ways Americans save for retirement. These accounts offer tax-advantaged growth, meaning you do not pay taxes on the money until you withdraw it in retirement. Many employers also offer matching contributions, which is essentially free money to help grow your nest egg faster. Be aware that early withdrawals before age fifty-nine and a half often come with penalties and taxes, so planning is key.
  
  
• Traditional IRA: A traditional IRA also offers tax-deferred growth, but with a little more flexibility compared to a 401(k). You can contribute up to a certain limit each year and you do not pay taxes until you start withdrawing funds in retirement. However, there are contribution limits based on your age and income, and early withdrawals can still result in penalties.
  
  
• Roth IRA: A Roth IRA works differently from a traditional IRA. You contribute after-tax dollars, but your withdrawals in retirement are tax-free, provided you follow the rules. There are income limits for contributions, so not everyone can take advantage of this option. For those who qualify, the benefit of tax-free growth and withdrawals can be significant.
  
  
• Brokerage Accounts: A brokerage account does not offer any special tax benefits, but it gives you complete flexibility. You can buy and sell investments at any time, use the money for any purpose, and access funds without penalties. The trade-off is that you pay taxes on any gains, dividends, or interest you earn along the way.
  
  
• Municipal Bonds: Municipal bonds are a popular choice for investors looking for tax-free income. The interest earned from most municipal bonds is free from federal income tax, and in states like Florida where there is no state income tax, investors get the full benefit of tax-free income. This can make municipal bonds especially appealing for retirees or high-income earners.

Why Account Choice Matters

Choosing the right account is about more than just taxes. Proper allocation across different types of accounts can help you:

• Reduce your total tax bill both now and in retirement
• Improve your financial flexibility when you need to access funds
• Provide different kinds of protection against market swings or unexpected expenses

For example, during volatile periods, a mix of accounts gives you options for where to draw income, how to respond to tax changes, or whether to take advantage of market opportunities. In Florida, the lack of state income tax adds another layer of benefit. Roth conversions, for instance, can become even more attractive since withdrawals will not be taxed at the state level. Municipal bonds can also provide tax-free income without worrying about state taxes reducing your returns.

Frequently Asked Questions

Should I sell my investments when markets fall?

No. Selling in panic usually means locking in losses. Most recoveries come after the worst days, not before.

Do geopolitical events impact my 401(k)?

Yes, they cause short-term swings. Over time, disciplined investors recover. Diversification is key.

Is moving to cash safer?

Cash provides stability but also means missing out on market rebounds. Too much can hurt long-term growth, especially with inflation.

How do I protect my retirement accounts in volatile markets?

Focus on diversification, regular reviews, and planning withdrawals carefully.

What should I ask my advisor during times like these?

• Is my portfolio still appropriate for my goals and age?
• Do I need to rebalance or adjust?
• What tax strategies can help me in the current environment?

Conclusion: No Panic, Just Perspective

When markets move suddenly, the headlines can feel overwhelming. There is no shortage of bold predictions, dramatic charts, or stories designed to stir emotions. It is easy to feel pressure to do something right away, but your response does not have to match the intensity of the news cycle.

Remind yourself of these essential points:

• Stick with your plan. A well-crafted strategy is built to weather both calm and stormy markets.
• Stay focused on your long-term goals. Day-to-day swings may feel intense, but real wealth is built over years and decades.
• Avoid emotional decisions. Acting out of fear or excitement can easily lead to mistakes that take years to fix.
• Seek professional guidance if you are unsure. Talking things through with a trusted financial professional can bring clarity, perspective, and confidence.

Uncertain times are a natural part of investing. They are not a signal to abandon your approach or rewrite your goals. Instead, they offer a chance to reaffirm your discipline and trust in the plan you have built.

What matters most is how you respond—not to a single headline or dramatic day, but over the years ahead. Patience, discipline, and thoughtful planning have rewarded investors through every cycle. If you need support or want to stress-test your current strategy, reach out to a financial professional who understands your goals and concerns.

Uncertainty will pass, as it always does. The habits and decisions you make today will shape your results for many years to come.