What Should You Do (and Avoid) During a Volatile Market?
Learn the practical actions you can take to stay grounded during volatile markets, and the common mistakes to avoid that could harm your long-term financial goals.
When markets become turbulent, the instinct to take action can be overwhelming. Volatility creates uncertainty, and in uncertain moments, doing something often feels better than doing nothing. However, reacting impulsively during volatile markets can cause more harm than good. At Optimize, we help you focus on the actions that matter, while avoiding the ones that could derail your progress.
What You Should Do During Volatile Markets
1. Revisit your financial plan and goals.
Remind yourself why you are investing in the first place. Your portfolio was designed to support long-term goals, such as retirement, education, or lifestyle needs, not to win short-term market games. Refocusing on your plan helps put volatility into perspective.
2. Check in with your risk comfort zone.
Use volatile periods as a moment to reflect on how your portfolio feels. If the swings are making you uncomfortable, it may be time for a conversation about your risk profile—not to react immediately, but to explore whether your portfolio still matches your feelings and needs.
3. Stick to your rebalancing schedule.
Rather than making emotional trades, rely on your portfolio’s disciplined rebalancing process. This ensures you automatically adjust your allocation when markets move significantly, buying lower and trimming higher, all within the framework of your plan.
4. Focus on your time horizon, not short-term movements.
Remember that market downturns are temporary. Long-term investors who stay the course have historically been rewarded, while those who react emotionally during downturns often lock in losses and miss recoveries.
What You Should Avoid During Volatile Markets
1. Avoid panic selling.
Selling after markets have already declined locks in losses and removes the chance to participate in eventual recoveries. The desire to get out and feel safe can cause long-term damage to your plan.
2. Resist the urge to time the market.
Trying to guess when to exit and re-enter markets is extremely difficult, even for professionals. Missing just a few of the best days in the market can have a significant impact on your long-term returns.
3. Do not obsess over headlines.
Volatile periods are often accompanied by alarming headlines and noisy social media chatter. This can feed fear and cause you to feel more uncertain than necessary. Filtering the noise and focusing on your plan is more productive.
4. Avoid abandoning your long-term allocation.
Making major portfolio changes based on short-term market events can throw your investment strategy off course. Stick to your allocation unless your life or goals have changed, not just because markets are volatile.
Optimize Helps You Focus on the Right Actions
At Optimize, we help you separate what feels urgent from what is important. During volatile markets, our role is to coach you toward the actions that serve your goals, while helping you avoid the reactions that feel comforting in the moment but often cause harm later.
We encourage conversations, offer perspective, and provide reassurance that your portfolio is designed to navigate volatility. Through disciplined rebalancing, thoughtful coaching, and alignment with your plan, we help you stay on track, even when markets feel chaotic.
Stay Grounded, Stay Invested, Stay Focused
Volatile markets will always be part of your investing journey. By focusing on the right actions and avoiding common mistakes, you can stay invested with clarity and confidence. At Optimize, we are here to guide you through these moments, helping you stay grounded in your plan, your goals, and your long-term success.