During the height of the market turbulence triggered by President Donald Trump’s tariff policies, many investors sought safety in cash, abandoning equity positions in reaction to mounting uncertainty.
That instinct to retreat felt rational at the time—markets were tumbling, headlines were dire, and volatility dominated daily trading sessions. But for advisors working with clients through these storms, the rebound that followed provided a critical reminder: panic selling is almost always the wrong move.
After suffering a swift 20% drawdown from record highs earlier in the year, the S&P 500 briefly dipped into bear market territory. Investors who exited during that window not only realized losses—they also missed the full snapback that left the index in positive territory by year-end. The whipsaw nature of this market cycle underscores a timeless lesson: staying invested through downturns is essential for long-term performance.
While President Trump’s messaging—most notably his post on Truth Social proclaiming, “THIS IS A GREAT TIME TO BUY!!!”—may have seemed overly simplistic at the time, the broader implication rang true. Those who stayed the course or added selectively during the selloff saw meaningful gains as the recovery unfolded. Meanwhile, investors who capitulated under pressure were left on the sidelines.
Even Seasoned Professionals Struggle to Stay Put
Panic selling isn’t just a retail investor problem. Institutional managers, CIOs, and even veteran advisors can fall prey to market-driven anxiety. Brian Belski, Chief Investment Strategist at BMO Capital Markets, shared publicly that his decision to remain bullish during the downturn drew significant criticism—both internally and externally. “We took a lot of heat in the media, a lot of heat internally, and a lot of heat from our clients,” Belski recalled in a May episode of Bloomberg Surveillance. Yet, his conviction was ultimately rewarded.
This highlights the behavioral challenges even experienced investors face during periods of stress. Markets operate in real time, but investment success is often measured over years—not weeks. For RIAs, the importance of helping clients anchor to long-term objectives becomes especially clear during volatile periods.
The Opportunity Cost of Market Timing
JPMorgan Private Bank’s U.S. head of investment strategy, Jacob Manoukian, offered a data-driven perspective on why staying invested matters. “Over the last 20 years, seven of the 10 best days in markets occurred within 15 days of the 10 worst days,” he wrote in a client note. This dynamic illustrates the danger of trying to time exits and reentries. The sharpest rallies often arrive on the heels of the deepest drawdowns—meaning those who panic sell not only lock in losses but also risk missing out on significant upside.
Capital Group has found that since 1954, a 20% or greater correction has happened roughly once every six years. The cycle of fear and recovery is nothing new, but investor behavior often fails to reflect this historical pattern. Despite decades of empirical evidence and countless advisory insights, panic selling remains a persistent threat to investor outcomes.
A Wealth Manager’s Role in Behavioral Discipline
For advisors, one of the most important responsibilities during market dislocations is preventing clients from making emotionally driven decisions. Market headlines may provoke anxiety, but data tells a different story—reacting to short-term volatility is rarely rewarded. Building portfolios with clear risk parameters and maintaining regular client communication can help investors avoid emotionally charged decisions that harm their long-term plans.
The Trump-era trade policy turbulence served as a vivid case study. It tested portfolios, convictions, and communication strategies. But it also reinforced a crucial truth: markets recover, and investors who remain disciplined are best positioned to benefit from those rebounds.
Turning Volatility Into a Teaching Opportunity
Rather than viewing periods like the tariff-induced volatility as setbacks, wealth advisors can use them to reinforce core principles with clients. Rebalancing opportunities, tax-loss harvesting, and reassessing time horizons are all ways to make market stress actionable rather than reactionary.
Advisors who proactively addressed fears during the drawdown likely preserved more than just portfolio value—they preserved client trust. Conversely, those who allowed fear to drive decisions may now be grappling with the aftermath of missed returns and second-guessing.
A Long-Term Perspective Remains the Best Hedge
The lesson from Trump’s tariff-fueled market swings is straightforward but critical: reactionary behavior erodes value. Long-term investment success is not achieved by avoiding every downturn—it’s achieved by enduring them. Advisors who can coach clients through this mindset, supported by historical perspective and evidence-based strategies, will continue to add measurable value through turbulent market cycles.
In a market era shaped by geopolitical surprises, algorithmic trading, and social media-fueled news cycles, volatility is no longer an exception—it’s a feature. Advisors who help clients navigate these environments with clarity and discipline are not only stewards of capital, but also behavioral anchors in an increasingly reactive investment world.
