Navigating a stormy market

Laurie Haelen recalls a recent morning conference call with financial strategists who warned of a high risk for recession. By the afternoon, they called it a low risk. 

The conference call attended by Haelen, senior vice president and director of wealth solutions at Canandaigua National Bank & Trust, is illustrative of the stock market’s response to certain Trump administration’s policies, especially tariffs on imports. As those have changed dramatically, sometimes within a few hours, so has the market.

“This is kind of manufactured volatility,” says Haelen. “It’s not the usual, where you’re like, ‘Well, we’ve seen this before.’ Tariffs have been around forever, but we haven’t seen aggressive actions like this. (That’s) part one. And then part two is where, in the morning it’s one action, in the afternoon, it’s another, and then our market moving.”

Market watchers had been expecting the Trump administration to soften its stance on tariffs. However, on April 2, declared “Liberation Day” by President Donald Trump, it was clear that the plan for stiff reciprocal tariffs was real. Over the following two days, investors lost $6.6 trillion in value, some estimates show, and more than $11.1 trillion had been erased from the U.S. stock market since Jan. 17, the last day of trading before Trump took office for his second term. 

Adding fuel to the market’s volatility, which this month reached its highest level since the shock of the COVID-19 pandemic, on April 9 Trump reversed course, placing a 90-day pause on tariffs he had unveiled a week earlier—except those on China, which sparked a retaliatory spree between the two nations.

On Wednesday, the major indexes fell again. The pullback was led by news from the tech sector—Nvidia warned of a $5.5 billion quarterly charge related to exports to China—and Federal Reserve Chair Jerome Powell in an economic brief said the central bank plans to wait for greater clarity before making interest rate adjustments.

Since April 1, the day before Trump announced his reciprocal tariffs, the S&P 500 has declined 6.3 percent, the Dow Jones Industrial Average is down 5.5 percent and the Nasdaq Composite has dropped 6.6 percent. The declines since Jan. 21, the first day of trading after Trump took office for his second term, are even sharper: the S&P 500 has lost 12.8 percent, the Dow has dropped 9.9 percent and the Nasdaq Composite is down 17.5 percent.

The market’s future direction is anyone’s guess.

Investors, including Haelen’s clients, are understandably jittery, and their advisers are doing what they can to help them make sense of the market turmoil. For instance, Best Times Financial last week sent its clients an email, inviting them to a meeting, run by a market expert, to gain a better understanding, says Kevin Best, personal chief financial officer.

“We recommended that distributions from their accounts be paused for April and May, to slow down the amount of money leaving their portfolio and allow for regrowth, when the markets return,” he says.

Best isn’t the only financial adviser who sent such a missive—investment professionals are busier than usual asking investors to stay calm amid choppy trading.

“One of the biggest mistakes investors can make is getting out of the market when it is near the bottom and missing a rebound,” says Luca Zambito, portfolio manager at Armbruster Capital Management. “Given the ongoing changes in tariff policies and uncertainty about the economic impact these tariffs will have, we don’t know if the market will continue to decline or if it has already reached its low. We believe staying the course is more beneficial than attempting to time the market.”

A popular investment

More Americans are invested in the stock market than ever before—roughly 60 percent overall, according to studies by the Pew Research Center and others. Bankrate’s 2025 survey shows that more than a quarter of Americans (27 percent) believe that the stock market is the best long-term investment. This group uses stocks to invest money that isn’t needed immediately, the February survey found. In 2022, 26 percent felt the same way compared with 16 percent in 2021.

“Coming on the heels of back-to-back strong years for stocks—the S&P 500 index was up 24 percent and 23 percent—Americans cited the stock market as their top long-term investment,” said Bankrate analyst James Royal, when the survey was released. “That outstanding performance contrasts with a poor performance in real estate, where prices have been hammered by high interest rates.”

The same survey, however, found that the top reasons among those who do not prefer the stock market for long-term investments include the market’s volatility (34 percent) and being intimidated by the stock market (21 percent). 

So far, April hasn’t been a month for the fainthearted. After much anticipation, on April 2, Trump unveiled some tariff specifics—a 10 percent baseline levy for all exporters to the U.S., effective April 5. He also announced a list of countries that would have tariffs higher than 10 percent— including 34 percent on Chinese imports and 20 percent on European Union goods, effective April 9. These tariffs followed an increase in taxes (25 percent) on auto imports.

“With policy and economic uncertainty so high, it is paramount for investors to not make portfolio decisions based on a reaction to headline-driven volatility,” says Matt Kelley, chief investment officer at Cooper/Haims Advisors, an ESL company. “We are investing in an environment where a single tweet about a potential policy change can send the stock market up or down several percentage points or more. During volatile periods, it is more important than ever for an investor to reassess their ability and willingness to take risk and make sure their portfolio’s risk exposure matches that tolerance.”

Assessing the market

For stability, either up or down, markets will need to have confidence around expected policy, Kelley says. 

“When businesses have clear insight into the specifics of tariffs affecting their operations, they can more confidently make investment decisions,” he says, adding that “yields, credit spreads, and volatility measures are all deeply influenced by shifting policy signals—making them reflections of uncertainty, rather than reliable predictors of where markets are headed.”

A credit spread is the difference between the return or yield of two different debt instruments—a government bond versus a corporate bond.

“If there is a wide gap in credit spreads, that is signaling that there are substantial risks to the market that investors are strongly worried about and reflecting in their investment allocations,” says Zachary Armstrong, first vice president and financial adviser at Sage Rutty & Co. “If the spreads are tight, it shows a lack of concern over risks impacting the market.”

Like his peers, Best reads a selection of analyses to keep track of the goings-on.  

“Based upon the readings over the previous 12 months we were concerned about the tech (sector), and more broadly the growth sector of the S&P 500,” he says. “We started adjusting to more dividend-paying stocks and as well as buffer-type strategies to mitigate the risk of stocks without removing the allocation of stocks from the portfolio.”

George Conboy, chairman of Brighton Securities, says there is no foolproof metric to assess the market. His firm typically monitors traditional financial ratios and includes balance sheet measures and dividend percentages among its metrics.

“Several of those are mainly relevant in the context of a company’s particular sector,” Conboy says. “For example, one wouldn’t compare a steel maker with a software company.”

Macroeconomic indicators also play a role—inflation, unemployment, interest rates, gross domestic product rates—in assessing the market as well. Armstrong believes the state of corporate earnings is a determining factor of stock prices, as are overall stock market evaluations.

“We use a lot of the same kind of metrics as everybody recognizing that we can’t really predict the future of the market, but we certainly can predict when might be, in some cases, a good time to enter certain asset classes that we think are valuable to have for the long term,” Haelen says.

Says Zambito: “Trying to figure out where the market is headed in the short term with consistency is impossible. However, valuation metrics can potentially provide some insight into expected longer-term returns.”

Armbruster Capital Management closely monitors the cyclically adjusted price-to-earnings ratio. This is a valuation measure, Zambito says, that uses real earnings per share over a 10-year period to smooth out fluctuations in corporate profits that occur over different periods of a business cycle. 

“Historically, a higher CAPE ratio tends to indicate lower future returns for stocks,” he explains. “The S&P 500’s CAPE ratio over the last 100 years has averaged at around 19x earnings. At the beginning of the year, the CAPE ratio was nearly double this long-term average at around 38x. This is higher than its peak in 1929 before the market crash and only slightly less than it was in 2000 before the dot-com bubble popped.

“Given that U.S. large-cap stocks are trading at historically high valuations,” he adds, “long-term returns will likely be lower than average unless company earnings grow at a rapid pace, or valuation levels continue to rise despite already being quite elevated.”

Eric Morris, portfolio manager and staff economist at Alesco Advisors, says “there are only two types of forecasters—those who don’t know, and those who don’t know they don’t know.”

“Short-term market predictions are notoriously challenging, which is why most active managers who try to predict the future are consistently outperformed by their respective benchmarks in the long term,” Morris says. “Paradoxically, in investments, long-term trends tend to be much less challenging to predict than short-term fluctuations. Our investment team uses a wide variety of valuations-based metrics to understand how markets are pricing assets compared to historic trends.”

This analysis, he says, may help identify components of the market that may be priced more affordably or expensively than others compared to long-term norms.

“If we find extreme dislocations from historic tendencies, we may consider whether an opportunity exists for us to improve the positioning of our portfolios,” Morris says.

Younger investors vs. retirees

Still, the investor roller-coaster ride is not for everyone. While older investors may have more experience of riding out tough times, being near or in retirement might translate into a need for ready cash. Reports show Gen Z has taken advantage of the flux. Content creator Piper Cassidy Phillips’ posts on the stock market went viral when she said “the stock market is on sale.”

“Investors young and old can both benefit from not reacting to news and short-term sentiments, as well as maintaining diversified portfolios with risk exposures that match their tolerances,” Kelley says. “For older investors nearing or already in retirement, it is more important to make sure their portfolio reflects their risk tolerance and near-term need for cash flow.”

For those particularly skittish, he says, “setting aside a portion of near-term spending—say, one or two years’ worth—in cash or cash-like assets can help weather volatility without feeling pressured to make reactive portfolio decisions. It’s not about exiting the market but creating space to stay grounded in your long-term strategy.”

Best recommends that all its clients keep an “emergency” account with six to 24 months of expenses in cash at all times. A retiree, for example, is recommended to have between 12 and 24 months’ worth of cash.

“One purpose of this account is to be able to stop distributions from your portfolio at any time with no disruption to their lives,” Best says. “This, in turn, allows the portfolio to rebuild without consistent distributions from it affecting its regrowth. We recommended that those clients who had extra cash on the sideline to consider investing it now in an aggressive portfolio and to contact us to talk through it.”

Most investors have heard it all before—stay the course, hedge against inflation, diversify, make the right allocations, and in times like these, reallocate or don’t change allocations. Despite the uncertainty, the stock market is the place to generate money for the future.

“Ironically, the stock market is generally one of the best ways to preserve and increase your purchasing power,” Armstrong says.

Sage Rutty has been buying physical assets for its clients for the last five years. Gold and silver, Armstrong says, are a good long-term hedge. 

“Companies that have more domestic sales and domestic demand may also stand out as winners from all of this and may be a helpful focal point for portfolios,” he adds.

Recession outlook

Despite their tips against panic and making safe bets, financial experts agree that a recession is likely.

“Tariffs have sparked a lot of uncertainty, which may result in consumers and businesses spending less now if they are unsure what the price of certain products and inputs will be in the coming months due to tariffs,” Zambito says. “The current administration has also noted that it will cut government spending, which is another component of GDP. While increasing tariffs and reducing government spending should help in reducing the deficit, it likely will slow GDP growth and may even cause a recession.”

No two recessions are the same, Morris cautions, while calling attention to some common factors: slower consumer spending, a drop in business investment, and a rise in unemployment.

“Uncertainty itself doesn’t mean a recession is imminent—the future is never certain, whether the best or worst times are ahead,” Morris says. “The current concern is whether the heightened policy uncertainty of the moment translates into changes in economic behavior that trigger some combination of those common factors that leads to a recession. Will the rise in policy uncertainty prove paralyzing to consumer spending, business investment, and employment? It certainly doesn’t help.”

The likelihood of a recession is very high, Best says. In early April, JPMorgan raised its probability of a global recession from 40 percent to 60 percent. 

“Even with the latest step-back from the draconian Liberation Day measures, the 145 percent tariff on China alongside the universal 10 percent tax on other countries actually lifts the U.S. average tariff rate to around 30 percent,” a JPMorgan report states.

Conboy views the economic uncertainty as an opportunity to profit. 

“I no more want to see a recession than anyone, but I don’t worry about what I can’t control,” he says. “Recession would likely mean some rotation away from some higher-valuation growth stocks and toward steadier and more reliable investments. Every market offers value, and most good values in bad markets look scary. 

“Our economy remains the world’s most dynamic, with investments at every point on the spectrum,” he adds. “The most conservative and the most speculative investor—and all in between—can find what they need. That won’t change, even in a recession.”

Opinions in this article are not intended to provide specific advice or recommendations.

Smriti Jacob is Rochester Beacon managing editor. 

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