Without question, 2025 has brought enough volatility to make many investors reassess their strategies. Uncertainty around Federal Reserve policy, inflation, elevated stock valuations and geopolitical tensions continues to create unease despite pockets of positive data. Mixed economic signals — from high-profile layoffs alongside strong demand for skilled labor, to a surging stock market paired with persistent consumer anxiety about prices — have left investors and business owners weighing the risk of a potential slowdown. Even speculation about a cooling AI sector has added to the wait-and-see mood.
The equity markets illustrate the turbulence, rising and falling with each new headline. At the same time, the unemployment rate has risen to 4.4 percent in September, after starting off the year at 4 percent. Even so, Lexington financial planners say the smartest response in uncertain markets is to stay the course.
Andrew Barker, a wealth advisor with Gratz Park Private Wealth, said disciplined investors who diversify and rebalance with their long-term goals in mind are best positioned to navigate volatility. “I think having that core investment strategy and being consistent with that is the most important thing,” he said. “Just because one area of the market is up doesn’t mean that another is going to be up, and sometimes the area that was the worst-performing area of the market the previous year will be the best-performing area of the market the year following. If you always have a diverse portfolio and are rebalancing the portfolio, it gives you the opportunity to capitalize when there are dislocations or volatility in the market.”
Barker said the most common mistake during uncertain periods is abandoning the plan. “It’s absolutely understandable for when the market goes down for people to feel some discomfort, but that’s why you build that investment plan — for those periods when the market is not performing quite as well. Having that sound strategy means that even when the market isn’t performing well, you still have confidence over the long term.”
Chasing short-term fads is another pitfall. “People can get in trouble by trying to chase the hot stock or like a ‘meme stock,’” he said. “That’s more of investing speculatively, because you’re probably going to be chasing things that don’t have sound fundamentals but are currently the hot, popular thing. You have to time those correctly in order to really be successful.”
Greg Watkins, investment advisor with Stock Yards Bank & Trust, agreed. Market timing, he said, requires investors to be right twice — an unlikely scenario. “To try to time it right to get out and then try to get back in, you’re probably taking more risk than you are just staying in the market and allowing the market to decline and subsequently rebound,” he said. “When you have really big down days, statistics show that some of the best market days are embedded very close to those really bad days. So, if you sell out on one of those really, really bad days, there’s a very high probability you’re going to miss the positive rebound. You don’t have to go back any further than April of this year to see exactly that example.”
Instead, Watkins recommends focusing on long-term allocations. A traditional balanced portfolio, he said, remains roughly 60 percent equities and 40 percent more stable assets such as bonds.
“The smart money allocates their dollars based on the amount and the timing of cash needs, so if you do happen to have excess cash sitting on the sidelines, when and if the market pulls back, it’s a great opportunity to invest,” he said. “Those are great opportunities to take advantage and maybe reallocate some shorter-term fixed dollars to some longer-term equity dollars and take advantage of investing in good companies at much cheaper prices.”
Rebalancing during strong market periods can also help maintain discipline. For example, if equities rise to 65 percent of a portfolio while bonds fall to 35 percent, the additional equity exposure can be trimmed and reinvested in bonds to restore balance. Overall, he said, it’s important to ensure you have three to six months’ worth of cash reserves on hand for any emergencies and to not panic.
“Had you invested in stocks this time last year, and then the downturn happened in April, if you had just said, ‘You know what, I know these are good companies, I’m going to stick with them,’ you’d be sitting pretty good right now,” he said. “But if you’d have panicked in April, you’d probably be kicking yourself right now.”