How—or if—to respond to turbulence in the markets

Volatility seems to be the main constant as 2025 gets underway. Earlier this month, the announcement of tariffs being imposed on China, Mexico and Canada—with the rumored addition of the European Union—sent stocks tumbling. On Monday, Feb. 3, the 30-stock average ended the day down 122.75 points, or 0.28%, but the lows of the day included the Dow Jones Industrial Average dropping 665.6 points (1.5%), the S&P 500 slipping 0.76%, and Nasdaq Composite fell 1.2%. That's despite the fact that, before the end of the day, the tariffs on Mexico and Canada were paused for 30 days, and Canada's retaliatory tariffs were also paused.

By Feb. 4, the Dow was up 134.13 points (0.3%), the S&P 500 gained 43.31 points (0.72%) and the Nasdaq gained 262.06 (1.35%), but the market volatility has caused many investors to have lasting whiplash. 

However, financial experts are still saying, "Don't panic." 

"There are always questions and risks when it comes to the economy and market," said Steve Wyett, chief investment strategist at BOK Financial®. "But it is also true that there are periods where it seems uncertainty is especially high, like now. The beginning of February has been especially volatile, and even scary for some, but overall, many account values are still higher than they were a year ago."

Time to review your financial plan

Instead of reacting emotionally to market volatility, Wyett suggests reviewing your financial plan to make sure you're on the right path. And if you don't have one, now is a good time to put one in place.

"A well-crafted financial plan can instill confidence that you're on track, even amidst market volatility," said Sascha Fincham, financial planning manager at BOK Financial.

In most cases, this starts with reviewing the asset allocation of your investments. "In general, when we are young, we have the single biggest asset for investing: time," Wyett said. "Over longer periods, investing in stocks has produced the highest returns, yet we also know stocks can decline materially."

As investors get closer to retiring, this means investing in stocks might be more of a risk than it was in the past, which means that those looking to retire in the next few years need to take a look at their finances sooner than later. "Fixed income investments, like bonds, still are offering cash flows significantly higher than when the Fed was holding rates near 0%; for those nearing retirement, bonds are much more attractive now than they were in the past," he said.

"Visit with your advisor or financial planner to make sure your asset allocation matches your ability, and willingness, to take the higher risk of stocks," Wyett added.

What to do instead of panic

"Ensure you have a clear financial strategy—and follow your plan. That can guide you through turbulent times," Fincham said.

She added that planning has a number of benefits, including:

• Understanding your long-term financial objectives, rather than reacting impulsively to volatility.
• The ability to stress test your financial plan against market volatility and other risk factors.
• Avoiding emotional decisions, such as short-term changes to your investment portfolio, without considering the long-term effects.
• Having the support of a financial advisor and financial planner during these times of change.

Aside from knowing your financial plan is sound, there are other ways to navigate tumultuous times in the market, including:

• Ask more questions. When reviewing your financial plan with your advisor, don't be afraid to ask the tough questions like, "What are the risks of this investment to my portfolio?"
• Keep your emotions in check. "While it's natural to worry when you see losses, remember that informed decisions are your best defense against making short-term, emotionally driven choices that may not align with your long-term goals," Fincham said.
• Understand how your assets are invested. "Now is the right time to ask your advisor questions that can help you better understand each of your investments. In turn, they should also be able to provide data on past periods of volatility for you to gain a better understanding of what could happen in the event of a downturn," Fincham said.
• Alleviate stress through understanding. Meet with your advisor to discuss your concerns and whether your financial plan is still on track to meet your goals. Also, keep in mind that advisors conduct "stress tests" on financial plans for volatility and risk as part of the financial planning process, Fincham said. So even though a market downtown may have caught you off guard, it doesn't mean your financial advisor and financial plan weren't prepared for it.
• Stop doom scrolling. The doom and gloom reporting in media coverage of current events can make investors feel uneasy, but if your financial plan is sound and you've talked to your advisor about what to expect, then it might be time to tune out the negativity.
• Channel your energy elsewhere. As you navigate the ups and downs of the market, it's a good time to focus on other things, like taking time to meditate, nixing mindless social media scrolling or going for a walk—whatever helps keep you calm in trying times. 

Wyett stressed the fact that history can be a good predictor of the future. "Some events are nearly impossible to forecast, and we cannot know how all asset classes will respond to every event, but history gives us a guide," he said. "It is impossible to achieve longer-term financial goals without taking some risk, but knowing the risks we are taking can help us feel more confident in an uncertain world."