Presented by Bob Brown
As residents of Las Vegas, we are no strangers to risk and reward. Whether it’s on the Strip or in the stock market, navigating uncertainty requires strategy, patience, and a cool head. In today’s ever-changing financial landscape, market volatility can feel like a high-stakes poker game – thrilling for some, nerve-wracking for others. But smart investing isn’t about gambling; it’s about making informed decisions that balance risk and opportunity.
Market volatility tests the nerves of even seasoned investors. Your rational brain may know to not overreact, but your emotional brain is susceptible to anxieties that can tempt you to stray from your investing strategy.
Fortunately, preventative steps—based on proven investing principles—can help you stay the course.
1. Assess your comfort with risk.
If you get anxious when markets dip, reassess how much risk you can handle. Ask yourself:
Emotionally and financially, how much fluctuation in the value of your investments can you tolerate?
Do you need your portfolio to generate income now or in the future?
Depending on your answers, you may need to adjust your portfolio to find a mix that allows you to pursue your goals and sleep at night.
2. Diversify.
When a handful of investments accounts for the lion’s share of your portfolio, they can have a greater impact on its performance—for better or worse. It can be important to spread your money across and within asset classes to aim to provide a cushion when markets are volatile. Ask yourself:
Does your portfolio’s success depend heavily on a few investments?
Are your investments concentrated in a single industry, sector, or country?
Do you hold the same securities in different funds within your portfolio?
3. Take the long view.
When markets are volatile, each fluctuation seems disastrous. But emotional reactions—like cashing out—can put you at risk for further losses. In fact, by the time you react to significant market declines, the worst may already be past. By cashing out when the market is down, you’re locking in those losses and limiting your portfolio’s ability to capture the recovery. Moving into cash for just one month following a significant market decline could reduce your returns by nearly 45% after one year, versus staying fully invested.*
Timing the market’s ups and downs is nearly impossible. Instead, ensure your portfolio mix aligns with your risk tolerance, your holdings are diversified, and you’re committed to sticking to your plan even during rocky times. For long-term investors, your time in the market can be more important than timing the market.
So, when markets get rocky, take a deep breath, think about the long term, and know that with a balanced portfolio, you’re better positioned to withstand volatility.
*Source: Schwab Center for Financial Research and Morningstar. Data analyzes the five periods from 10/1974 through 3/2022 during which the S&P 500® Index fell by 20% or more. Market returns are represented by the S&P 500 Total Return Index, and cash returns are represented by the total returns of the Ibbotson U.S. 30-Day treasury Bill Index. Cumulative returns are calculated using the simple average of returns from each period and scenario. Past performance is no guarantee of future results.
Bob Brown is an Independent Branch Leader and Financial Consultant at Charles Schwab with over 35 years of experience helping clients achieve their financial goals. Some content provided here has been compiled from previously published articles authored by various parties at Schwab. Investing involves risk, including loss of principal. Diversification strategies do not ensure a profit and do not protect against losses in declining markets.
Employees of Schwab are not estate planning attorneys and cannot offer tax or legal advice, or create and prepare legal documents associated with such plans. Where such advice is necessary or appropriate, please consult a qualified legal or tax advisor.
©2025 Charles Schwab & Co., Inc. (“Schwab”). All rights reserved. Member SIPC.
Bob Brown, CFP, Independent Branch Leader and Financial Consultant, Las Vegas- Centennial Hills Independent Branch, Tel: 702-854-6140, 7910 W. Tropical Pkwy # 120, Las Vegas, NV 89149