Market volatility, tariffs, and the importance of perspective
Most investors, at some point, experience moments when it feels like the world is shifting beneath them. This week is one of those times.
On March 4th, the president implemented new tariffs:
25% on imports from Mexico and Canada (except Canadian energy, which faces a 10% tariff).
An additional 10% tariff on imports from China.
Markets reacted predictably: the stock market dropped, volatility spiked, and headlines shouted.
And even as I write this, the situation continues to evolve. Markets are adjusting, policymakers are responding, and uncertainty remains. But while the news cycle moves quickly, the principles of sound investing remain the same.
Why do tariffs make investors nervous?
At their core, tariffs increase costs for businesses, which can squeeze profit margins. And if there’s one thing markets care about, it’s profits.
We read many perspectives on the global economy, and Dr. David Kelly, Chief Global Strategist at J.P. Morgan Asset Management, has been a consistent voice of reason for over a decade. Known for his practical insights, Dr. Kelly asserts that tariffs result in "higher prices, slower economic growth, reduced profits, increased unemployment, greater inequality, lower productivity, and heightened global tensions."
Investors aren’t just reacting to tariffs. They’re reacting to the unknown:
How long will these tariffs remain in place?
Are they just a negotiation tactic?
Is this a temporary period of volatility, or the beginning of a longer cycle?
Markets don’t panic about what they know—they panic about what they don’t.
Investing is messy. It always has been.
Market downturns often feel like a unique crisis. But history tells a different story.
Recessions, inflation spikes, political uncertainty, trade wars, interest rate hikes—these challenges are not new. The market has faced them all before. And yet, over time, it has moved higher.
As noted by author Seth Godin, “The future is messy, and the past is neat. It's always like that.”
The importance of perspective
Market downturns feel different when you’re living through them. The news feels bigger. The risks seem higher. The headlines are scarier.
This feeling is amplified after strong market years, when investors feel they have more to lose—at least on paper. In 2023 and 2024, the S&P 500 delivered a total return of nearly 58%, propelling more investors into the ranks of "401(k) millionaires," according to Fidelity.
It’s natural to feel anxious about market fluctuations, but fear is never a sound investment strategy.
A strong financial plan is built specifically for you — your goals, your risk tolerance, and your timeline. More importantly, it’s designed with the understanding that markets are unpredictable and often messy. By accounting for uncertainty upfront, your plan provides a steady framework, allowing you to stay the course during volatility instead of reacting to short-term fluctuations.
As John Bogle, the founder of Vanguard, wisely put it, “The stock market is a giant distraction from the business of investing.”
Bad news drives headlines, but bad news should not drive investment decisions. Market downturns are inevitable, but they are also temporary.
Reasons to sell? There will always be more.
There has never been a time in history when you couldn’t find a reason to sell.
Recessions. Political chaos. Interest rate hikes. Pandemics. Trade wars. Every one of these events made investors think, “Maybe this time is different.”
And yet, over time, the market has rewarded patience, discipline, and long-term thinking.
Morgan Housel, author of The Psychology of Money, puts it best: "Your success as an investor will be determined by how you respond to punctuated moments of terror, not the years spent on cruise control. A good definition of an investing genius is the man or woman who can do the average thing when all those around them are going crazy."
What can you control?
While headlines will continue to change, wise investors focus on what they can control:
Maintain an emergency fund. The best way to endure volatility is to have enough cash to cover the unexpected.
Manage your news consumption. Headlines are designed to capture attention, not provide perspective.
Hold enough short-term bonds and cash so that you’re never forced to sell long-term investments during even the longest downturn.
Maintain a diversified approach to your portfolio. Lately, the market has been driven by just a handful of the biggest companies. However, as of March 4th, a globally diversified portfolio has outperformed the S&P 500 year to date.
Stay focused on the long game. Your success as an investor won’t be determined by what happens in the next week or month. It will be determined by how you navigate market noise over decades.
What should you do now?
If you have a financial plan, now is a great time to revisit it. These moments of uncertainty are exactly what your plan was built for.
If you don’t have a plan, this is a reminder of why you need one. A well-structured investment strategy helps you stay focused when markets get messy.
At Human Investing, we help investors build financial plans that are designed for the long term; plans that account for uncertainty, so you don’t have to react to every headline.
If you’re feeling unsure about the road ahead, let’s talk. The best investors aren’t the ones who predict the future—they’re the ones who are prepared for it.
References:
Kelly, D. (2025, March 3). The trouble with tariffs. J.P. Morgan Asset Management. https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/market-updates/notes-on-the-week-ahead/the-trouble-with-tariffs/
Housel, M. (2020). The psychology of money: Timeless lessons on wealth, greed, and happiness. Harriman House.
Disclosures:
These market returns are based on past performance of an index for illustrative purposes only. Past performance does not guarantee future results. All investing involves risk, including the loss of principal. Index performance is provided for illustrative purposes only and does not reflect the performance of an actual investment. Investors cannot invest directly in an index.
The information provided in this communication is for informational and educational purposes only and should not be construed as investment advice, a recommendation, or an offer to buy or sell any securities. Market conditions can change at any time, and there is no assurance that any investment strategy will be successful.
Diversification does not guarantee a profit or protect against a loss in declining markets. Asset allocation and portfolio strategies do not ensure a profit or guarantee against loss.
The opinions expressed in this communication reflect our best judgment at the time of publication and are subject to change without notice. Any references to specific securities, asset classes, or financial strategies are for illustrative purposes only and should not be considered individualized recommendations.
The opinions expressed by third-party individuals, including Dr. David Kelly, Seth Godin, Morgan Housel, and John Bogle, are their own and do not necessarily reflect the views of Human Investing or its affiliates. Their inclusion is for illustrative and educational purposes only.
Human Investing is a SEC Registered Investment Adviser. Registration as an investment adviser does not imply any level of skill or training and does not constitute an endorsement by the Commission. Please consult with your financial advisor to determine the appropriateness of any investment strategy based on your individual circumstances.
