Trade Tariffs, Market Volatility & Staying the Course

With recent headlines dominated by global trade tensions, many investors are understandably uneasy about the resulting market volatility. As major economies engage in tariff disputes, markets have reacted with short-term turbulence—something that often grabs attention and stirs concern.

But volatility is not new, nor is it unusual. In fact, it’s part of what makes markets work.

Although the current environment may feel uncertain, history reminds us that markets have navigated countless challenges before—Brexit, COVID-19, inflation shocks, interest rate hikes, geopolitical unrest—and have consistently rewarded those who stayed invested with a long-term perspective.

Market Setbacks Are Normal

A look back through market history shows that significant intra-year declines are more common than many realise—and often followed by surprisingly strong year-end results. The table below shows the maximum intra-year drawdowns (DD) and end-of-year total returns (TR) for the S&P 500 from 1950 to 2025. 

It reveals that after severe drawdowns, the market has often recovered the full decline and finished the year strongly positive.

• 1970: Market dropped -26% during the year… yet ended +3.6%
• 1975: Fell -14.1%, but rebounded to finish +37%
• 1987 (Black Monday): Down -33.5% mid-year, closed +5.8%
• 2009: In the midst of the Global Financial Crisis, declined -27.6%, but ended +26.5%
• 2020: COVID crash brought a -33.9% drawdown… and still finished +18.4%

These examples highlight a powerful truth: markets often recover from short-term pain to deliver long-term gain. Staying calm during periods of uncertainty has historically been the winning strategy.

Emotions vs. Evidence

No one can forecast exactly how today’s challenges will play out—or when. And yet, history shows us that uncertainty is always part of the investment journey. When one crisis ends, another will eventually follow. That’s simply the rhythm of global markets.

This is why reacting emotionally to headlines or short-term events can be so costly. It’s easy to believe that “this time is different,” but more often than not, it’s not. The stories change—but the pattern of long-term recovery remains remarkably consistent.

Opportunity in Disguise?

Periods of market volatility can also present opportunity. When fear takes over, quality assets often become undervalued. For investors with a long-term outlook, this can be a chance to invest at more attractive prices—what some might call “the market on sale.”

Staying focused through uncertainty, avoiding reactive decisions, and keeping sight of long-term goals are all hallmarks of successful investing.

“History doesn’t repeat itself, but it often rhymes.”

The key is not to avoid risk altogether, but to manage it wisely—and remember that volatility, while uncomfortable, is part of the price we pay for long-term returns.