Investing Amidst Constant Global Volatility
Recent Global Events and Their Impact on the Markets
There has only been 26 days of peace since 1945 where no war was being waged between two states. Against this backdrop, markets have always had to contend with forces that are not purely economic. Wars, policy shifts, and diplomatic ruptures directly affect asset prices, growth forecasts, and investor sentiment. History shows that markets have, over time, absorbed and moved through these disruptions. But in the near term, they are consequential and understanding them is a necessary part of informed investment decision-making.
When President Trump first announced sweeping “Liberation Day” tariffs in April 2025, markets sold off sharply, though they quickly recovered thanks to what traders coined the “TACO trade” (“Trump Always Chickens Out”). Trump reset market expectations by first announcing very high tariffs, then imposing comparatively lower ones, with investors eventually fading the initial panic. The real economic drag, however, remains uncertain. Apple’s CEO Tim Cook warned that tariffs were expected to cost the company $900 million in a single quarter, and the full burden on corporate earnings and consumers has yet to fully materialise.
Most recently, the US–Israel strikes on Iran in late February 2026 rocked markets. Oil surged over 13%, while gold broke to fresh highs above $5400 per ounce as a safe-haven asset for investors. Aviation stocks tanked, hit by higher jet fuel costs and route disruptions. Equity indices plunged across Asia, Europe, and the US, with the KOSPI crashing more than 12% in one day, hitting record lows. This therefore acts as a clear instance of how sentiment can drive market outcomes significantly.
Volatility & Panic
Volatility essentially means prices moving up and down more frequently and by larger magnitudes than usual. While that is just a mechanical event, what’s harder to account for is how people respond to it.
As portfolio values fall, the instinct to sell and limit further losses becomes difficult to resist. As established by Kahneman and Tversky (1979), that is not irrational as the psychological pain of a loss is felt more acutely than the pleasure of an equivalent gain. Yet, of all investors who panic sell, nearly 31% never return to reinvest in risky assets at all, permanently locking in their losses rather than participating in the recoveries that typically follow a plunge.
A clear instance of this is the COVID-19 crash. The Russell 3000 Index dropped more than 20% in a single month in early 2020, yet went on to set new all-time highs the following year, regaining its pre-pandemic level in under 5 months. Investors who sold into the panic not only crystallised their losses but faced a further dilemma of when to get back in. Those who wait for sentiment to turn positive often have already missed the bulk of the recovery.
Opportunities Amidst Declines
Markets move in cycles, and downturns have historically preceded recoveries. Notably, the best days in markets tend to cluster around the worst ones. 78% of the stock market’s best days over the past 30 days occurred either during a bear market or within the first two months of a bull market. The implication is clear: investors who exit during periods of stress to wait for calmer conditions frequently miss the very days that drive long-run returns.
Periods of market weakness also present a significant opportunity to acquire quality assets at depressed valuations. Downturns do not always represent an internal error: fundamentally sound companies often fall alongside weaker ones simply due to broader sentiment. Similarly, even indexes like Singapore’s fall during periods of global uncertainty, despite its exceptional diplomatic neutrality and standing. What is truly tested during these periods is therefore the willingness to remain invested, or even to add exposure, at precisely the moment when uncertainty is at its highest.
The case for staying invested ultimately rests on a simple but frequently overlooked distinction: time in the market versus timing in the market. Short-term price movements, driven by headlines and sentiment, often do not reliably track the underlying value of companies and economies. An investor fixated on short-term fluctuations risk losing sight of core considerations such corporate earning trajectories and the long-term strategic positioning of companies and economies.
The Role of Professional Advice in Uncertain Times
Volatile markets test not just portfolios, but the investors behind them. The primary role of advisers during periods of heightened uncertainty is to remain disciplined and to not be driven by uninformed emotions or panic. These periods of stress expose flaws in a portfolio: outdated positions, allocations that no longer reflect a client’s actual goals and circumstances. It is precisely during these moments that advisers must be most rigorous in their assessments, rather than allowing client anxiety to drive decisions. Diversification across asset classes, sectors, and geographic regions therefore rings most important.
Markets will always present new sources of uncertainty. What endures across cycles is the discipline to remain anchored to long-term financial objectives when short-term conditions make that most difficult.
Written by Finna Ng
