INVESTING THROUGH VOLATILITY: STAYING DISCIPLINED IN UNCERTAIN TIMES

Will Skrebels - Investment Manager at Rathbones

A Volatile World

From heightened political tensions in the U.S. to ongoing conflict across the Middle East and the prolonged war in Ukraine, global events continue to weigh heavily on financial markets. For investors, these developments often prompt a familiar concern: “Is now the time to reduce risk?”

While these fears are understandable, it’s critical to distinguish shortterm noise from long-term investment fundamentals. The reality is that volatility, however unsettling, is not only normal but expected in functioning capital markets. What matters most is how investors respond to it.

Why Volatility Shouldn’t Be Feared

Market corrections are not outliers, they’re recurring features of the investment landscape. Historically, equity markets experience a pullback almost every year. These periods often feel like the beginning of something worse, but generally they are phases in a longer upward trend.

What’s important is not the presence of volatility, but the ability to withstand it. Investors who stay invested through these periods have historically been rewarded1. Most recently, Trump’s tariff policies spooked markets in February. However, since then the FTSE 100 has rebounded 17.2% and is at new all-time highs, having just breached 9000 points2. Pullbacks, although scary, can create opportunities, especially for those who have a plan and the discipline to follow it.

What Follows the Fall? Rebounds

One of the most consistent patterns in market history is the rebound that follows a decline. The sharpest market recoveries develop in the wake of downturns. These rebounds are often sudden and difficult to predict, which is why being out of the market for even a few key days can severely impact long-term returns3

There is an old adage: It’s not about timing the market, it’s time in the market. Yet many investors are tempted to sell during turbulent times. The instinct to “do something” can feel powerful, but acting on that impulse often leads to mistimed exits and missed recoveries. For Investors with long investment horizons, resisting that urge is vital to building wealth over time.

The Cost of Emotional Investing

Financial decision-making can be deeply emotional. When markets are falling and headlines are negative, the impulse to protect what you’ve built is understandable. But studies in behavioural finance, and real-world investor outcomes, show that decisions driven by emotion are often counterproductive and potentially damaging4

Loss aversion, short-term memory, and overconfidence can lead to market timing attempts that hurt rather than help. It is important to find balance and make sure we are not overreacting to the world around us.

This is where guidance matters.

How a Trusted Investment Manager Helps

Working with an experienced investment manager can be one of the most effective ways to avoid emotionally driven mistakes. A manager doesn’t just build a portfolio, they build a framework for consistency, even when conditions are volatile.

Here’s how:

Strategic Clarity: A robust investment plan is based on your unique goals, time horizon, and capacity for risk. Enabling decisions to be grounded, not reactive.

Risk-Adjusted Portfolio Design: Diversification

across regions, sectors, and asset classes is more than a buzzword—it’s how risk is balanced without sacrificing potential return.

Rebalancing Discipline: When markets move, portfolios drift. A disciplined manager rebalances strategically, aiming to lock in gains and repositioning capital where risk/reward is favourable.

Behavioural Buffer: An investment manager acts as a steadying hand. They can help their clients stay focused when headlines become overwhelming, keeping decision-making aligned with long-term objectives and researching newsflow in depth to make rational decisions.

Turning Volatility into an Advantage

As mentioned, for long-term investors, volatility is not just a risk but can be an asset too. Short-term fear often drives prices below intrinsic value. Benefitting from this requires liquidity in a well-diversified portfolio, perspective, and above all, a plan. Investors who are wellpositioned can take advantage of these sell-offs, adding valuable investments at discounted prices.

Final Thoughts: Composure Over Reaction

Today’s geopolitical and economic uncertainty may feel unprecedented, but the market’s reaction to uncertainty is not. Volatility will come and go. What endures is the value of a wellconstructed portfolio, the discipline to remain invested, and the insight to stay calm when others may not.

For investors with significant wealth, the goal isn’t just to grow assets, it’s to grow them wisely, with resilience. That means trusting in process, experience, and long-term perspective.

With the right guidance, volatility becomes less of a threat, and more of an opportunity.

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The value of investments and the income from them may go down as well as up and you may not get back what you originally invested.