US Stocks have struggled a bit this year. Market volatility has been at the forefront of investors' minds, fueled by policy uncertainty, layoffs, and various economic factors. As volatility ebbs and flows, it's important to understand the patterns that emerge with each cycle. Below, I've outlined key concepts about market volatility, along with three proactive steps you should take and three common mistakes to avoid when markets become turbulent.
 3 Key Concepts that float around during market volatility.
Defining Market Volatility: Volatility can mean more nuances, downswings and/or gains in the market. It is typically associated with down swings. For experienced investors and newer investors, gaining perspective that volatility is a normal part of long term investing is key.
Corrections & Bear Markets Explained: These terms reflect a downturn of 10% (From the previous high of an index) and 20% respectively. They often are floated around without context so it’s important to know what they are.
The "This Time It's Different" Fallacy: Technically, every downswing is different as money flows from one place to another, but the underlying market mechanics tend to be similar. Understanding that market patterns tend to repeat, even if catalysts differ, helps investors maintain discipline during volatile periods.
3 Proactive Steps you should take:
 Communicate with your advisor on the following questions:
Does my investment strategy still align with my goals?
Would you plan to do a re-balance if markets go down considerably?
Are there any specific changes/segments/ or factors you are considering adjusting to with each volatility cycle.
Develop a Volatility Response Plan: Consider a pre-planned approach to volatility, and how you may take advantage of a downswing, especially if you are still in the accumulation stage. Do you aim to invest more into your investment strategy if the market goes down? Â
Recognize Your Emotional Responses: Identify and self-recognize your own thoughts and patterns with market volatility. Often, volatility in the market can generate a fight/flight response in people, especially if the event causing a market downturn impacts their everyday life. Know that the stock market tends to be its own animal and is impacted by much more than temporary disruptions.
3 Things you should not do in down market cycles:
Avoid Panic Selling and Market Timing: Successful investing is not about timing the markets, it is about aligning your investments to your goals and values, and managing those investments in a disciplined and flexible way. Market timing rarely works and when it does, luck is often the main reason. Â
Lastly, selling out of the market creates a catch 22 problem, where it is hard to rationalize getting back in. Most people feel validated when the market continues to go down and they don’t reinvest when the market enters a recovery phase as they are always waiting for the ‘right time’. On the contrary, people who sell out on a downswing have a hard time reinvesting and accepting the loss that they have taken as a result of selling, and further delay reinvesting as a result.
Consume and make decisions based on news cycles. Many of the happenings that impact the markets are often out of our control, and what we consume in the media often amplifies or blurs our decision making. Remember that financial markets operate independently of temporary disruptions, influenced by numerous complex factors beyond headlines.
Associate political happenings with markets. Similar to the above, government alone does not control the market given the breadth of factors that move prices. Adjust your holdings based on your goals, not political happenings.
Most importantly, know that market volatility is not new. We have had three bear markets since 2018, and they come and pass, giving way to recovery. This has taken place since the inception of the stock market and will continue to do so in the future. Recessions are also a normal part of the economic cycle, even though they can cause pain outside of the stock market. Ultimately, proactively adjusting your account and good overall financial planning based on your intended usage of the money you have worked hard to save is key in navigating volatility.Â