In a Volatile Year for Investments, Advisors Focus on the Long Term

Bumps in the Road

Pat Grenier says investors worried about market volatility shouldn’t panic, but instead seek competent advice.

Early April was an anxious time for many investors, but not a surprising one for the advisors they rely on.

“We prepped for a volatile market this year,” said Pat Grenier, owner and principal at Grenier Financial Advisors in Springfield. “We thought the market was high. We thought there would be a pullback. We didn’t expect the amount of volatility that we had, but we did expect a little bit of a pullback.”

The early months of the Trump administration have impacted the markets in a number of ways, particularly with an aggressive series of tariff decisions — some in force, some only threatened as negotiating tools — that have triggered fluctuations in the stock market and plenty of client phone calls to investment firms. But Grenier isn’t overly concerned, especially as things are calmer now.

“To me, this is more of an event-driven gyration. Even though we did expect some pullback, I think a lot has to do with all the negative talk about tariffs,” she explained. “So, one of two things is going to happen. The tariffs are going to work out, and the market’s going to do well. Or tariffs are not going to work out, and then the market will adjust and eventually do well. So I’m not negative.

“I think people should not panic,” she went on. “I think they should seek competent advice and not assume things. We’re bombarded 24-7 with news bites, but they’re just news bites. They don’t tell you the whole story.”

“We didn’t expect the amount of volatility that we had, but we did expect a little bit of a pullback.”

Jeff Liguori, executive vice president and senior portfolio manager at Bradley, Foster & Sargent in Hartford, Conn., had similar feelings as the calendar turned.

“At the end of 2024, the optimism was pretty excessive. Everything had gone up. People were feeling really good about the market; it was up 20-odd percent from previous years. There was almost too much enthusiasm.”

So a correction was likely, even if some of the forces generating it were questionable, he added. “Economically, tariffs can be so excessive that it’s not healthy for the economy. But when we were in the throes of that, we told clients, ‘this is a manufactured crisis; it can easily be turned around with a stroke of a pen, or with potential legal roadblocks.’ And that’s how it played out.

Jeff Liguori

“The data is 100% in your favor. Nothing ever goes straight up. We’ve lived through most of these crises — the housing crisis, the tech bubble, the Great Recession. All of those, time and again, have been incredible buying opportunities.”

“After a while, it’s been less of what we consider a headline risk. Before, when every headline came out, stocks reacted instantaneously. Over time, we’ve come out of that, and now people are asking how much of this is really going to materialize.”

That said, taking a sanguine view of the long-term health of the markets is much easier when the tides are calm than when they’re volatile, Liguori noted.

“But the data is 100% in your favor. Nothing ever goes straight up. We’ve lived through most of these crises — the housing crisis, the tech bubble, the Great Recession. All of those, time and again, have been incredible buying opportunities. It’s almost like, if there’s no pain, there’s no gain.”

Risks and Rewards

Tim Suffish, senior vice president and head of equities at St. Germain Investment Management in Springfield, said it’s important that investors understand the long-term nature of the firm’s strategies and how it approaches the market — and its inevitable shifts.

“If we’re doing our job well, we have a conversation with our clients up front about the risks and rewards of various asset classes,” Suffish explained. “Cash is the only asset that does not go down, but cash yields very little. Your checking or savings account is guaranteed by the FDIC, and you might get half of 1% a year. But it’s not going anywhere.

“On the other end of the spectrum, stocks are for the long term, and by looking back a few years, you can see what can happen with stocks. Right after COVID hit, stocks were down 35% in one month. It was one of the worst months ever for the markets. Of course, the economy got flooded with stimulus and low interest rates and bounced back.”

Tim Suffish

“We’ve been through it before, and the volatility and the drawdowns happen. The reasons may be different each time, but the global economy is resilient.”

That said, “when you talk about volatility, people need to know what to prepare for. If you can prepare for it, history shows you’ll be rewarded by taking on some risk.”

To explain, Suffish took a quick tour through the past 25 years of market-jarring events, and why risks tend to be short-term and rewards longer-term. The dot-com crash of 2000-01 saw the market down 50%, as did the housing boom and bust and resulting global financial crisis in 2008-09. China-related trade concerns in 2018 caused another 20% drawdown, followed by that 35% COVID-driven drop in 2020, and another 18% hit in 2022 caused by inflation concerns.

“Even with all that volatility and scary drawdowns — and these are not 5% moves in the market that, if you squint at your monthly statement, you don’t notice it; these are big numbers that you do notice — the stock market still averages, over that time frame, going back to 2000, about 7% a year.

“So the market historically rewards you for taking risks,” Suffish went on. “Taking risks is really the only way you’re going to get those rewards, and the rewards tend to be proportionate with your risk. So part of our counsel to clients who are nervous in a time like this is that it’s more than likely a repeat of what we’ve seen over the past 20, 25 years. We’ve been through it before, and the volatility and the drawdowns happen. The reasons may be different each time, but the global economy is resilient.”

Liguori agreed. “We have this philosophy that, when the market gets rocky and volatility increases, there’s always a reason for it, whether it’s something macroeconomic or, in this case, a combination of political and macroeconomic factors. We’ll hear clients say, ‘this time, XYZ is different than the last time.’ Yes, whatever is causing the volatility might be different, but the reaction is always the same. Economic decisions are being made by humans, and humans always act the same way.”

That said, he continued, it can be beneficial to be more aggressive when the market drops.

“No one wants to lose money, even if it’s just on paper. But if I’ve done my job and the market is down 20 but you’re down 10, maybe increase your exposure a little. If we look at the stock market in a broad sense, the time to be more aggressive on equities or stocks is at the point when humans feel really uncertain. It’s a contrarian way to look at it.”

Planning for Life

That long-range view of investments plays into how those we spoke with handle clients; they’re plotting out a path where investments will meet the various needs of life — a home purchase, college education, retirement — both now and well into the future.

“We have to know the client really well,” Grenier said. “Sometimes we know them better than their own family knows them. We have to know what makes them tick, what their goals are, what their aspirations are, what they want from a value perspective, what their values are, so that we can kind of guide them and use the investments as a tool to get them where they want to be. We do so much hand-holding for clients.”

A client’s portfolio can employ a range of vehicles, from mutual funds to stocks, bonds, and annuities.

“When somebody comes here, we want to make sure that they’re well taken care of and that the risks that they face are minimized,” Grenier went on. “And you have to acknowledge that they are nervous, and it is nerve-wracking, when you see the market gyrate the way it has. Nobody likes to see the value of their portfolio come down. So what I try to do is acknowledge that, ‘yes, I get it,’ and then I try to put it in perspective for them.”

Like Liguori, she said those nervous times can be an opportunity.

“We know the market is resilient. And when the market is down the way it was at the beginning of April, I used it as an opportunity to add because we were buying good companies on sale. We added in where we could.”

That said, clients who are closer to retirement — or already there — will be less likely to tolerate risk.

“If they are going to depend on their investments for a good portion of their living expenses, their livelihood, then you have to be more conservative with their investments,” Grenier said. “We’ve been using some buffer programs that kind of make sense — it does cap the upside, but it protects the downside.”

Suffish said portfolio diversification is the best path to enhanced returns while reducing risk.

“When you have diversity in asset classes that are not perfectly correlated, you can build that portfolio,” he explained. “Last year, large cap U.S. stocks were up 20%, but bonds were about flat on the year. But by mixing the asset classes — U.S. equities, foreign equities, bonds, cash, maybe some precious metals — these assets are not perfectly correlated with each other, so you get the blended return. But you also get the blended volatility or risk, which benefits the portfolio.”

Whatever the circumstances in the market, all those we spoke with said that those who start investing early in life — in their 20s and 30s, as opposed to 40s, 50s, or later — can exercise a greater degree of risk taking.

“A younger investor can afford to be more aggressive, can afford to be more speculative. They’re not going to feel the consequences for a long time,” Suffish said. “Our typical client is close to retirement or in retirement, so they need to be diversified and take the sharp edges off off the market downturns.”

Grenier agreed. “The earlier you start, the better, because you have time on your side. If you look back at the market throughout the years, there have been so many gyrations, and you might be caught in a point where the market is down. But if you’re looking at it long-term, it has only gone up.”