Clients often look to their advisers for clarity and reassurance during turbulent market periods. It’s normal for clients to feel uneasy in uncertain markets. Still, uncertainty is part of investing—and it’s also why returns above cash are achievable. With headlines dominated by US tariffs, political drama, AI de-ratings, and market pullbacks, it’s easy for clients to feel overwhelmed. Helping clients filter through the noise and focus on what really matters is one of the most valuable roles investment professionals like ourselves can play.
We expect that Trump, and the bond and equity markets will remain with locked horns at least until when Trump leaves office. In periods of relative market calm, he will use any opportunity to pursue his agenda. Once markets reach their unacceptable pain level for the current US administration and either US equity markets fall sufficiently or bond yields rise too quickly, he will pull back, but only until the next opportunity.
Therefore, in this blog, we address some of the most common questions we’re being asked right now—and offer guidance to help you reassure clients, filter through the noise, and keep them focused on their long-term objectives. With well-diversified portfolios, a long-term mindset, and patience, investors could not just weather these storms but actually profit from them.
“The market is all over the place. Shouldn’t I just move to cash until things settle down?
Answer:
In the broadest possible terms, there are two kinds of market participants: investors and traders. Sometimes, in the heat of a market-moving event, we can forget which group we belong to, and this can be an expensive but understandable mistake.
Traders don’t have long-term time horizons and often don’t have any time horizons at all. They buy (go long) or sell (go short) an asset and may hold it for just a few weeks, days or even hours. Once the price target is hit or the market moves sufficiently against them, they act swiftly and hopefully decisively. Moving in and out of cash for traders is often just a regular part of their trading regimes.
This is different for investors, where attempting short-term market timing can often lead to being whipsawed, consolidating losses and time out of the market during the often-brutal rallies you find even during market falls. Historically, some of the best days in markets occur right after the worst ones, and this was the case even during the worst crash of all – The Wall Street Crash of 1929. By stepping out of the market, clients risk missing those key recovery moments. Remaining invested allows fund managers the flexibility to take advantage of cheaper valuations and reposition portfolios for long-term growth.
The secondary but no less important question is, when do you get back in if you run to cash?
Let’s say the markets fall another 10% from where you sold out. Behavioural finance tells us it is highly unlikely a client will want to return to the markets, fearing they will be catching the proverbial falling knife. On the other hand, if the markets recover and go up 10%, the client is now paying more for the same assets they sold. Timing when to re-enter is challenging, even for professionals. So, to answer the question, we always advocate accumulating assets in a well-diversified portfolio that is regularly rebalanced.
“Will US equities bounce back?”
Answer:
Recovery is more than possible for many US stocks; it’s inevitable (almost) no matter how many wrenches Trump throws into its trade relationships. However, a key point is that future global market leadership may look different from the past. US equities won’t necessarily lead the next cycle in the way they have over the past ten years.
It’s worth noting that, during the 2000s, US market performance was largely unremarkable, except that many investors were wary of investing in post-dotcom crash America, as US assets had been seen as the epicentre of the crisis. Over time, a belief has built up, particularly among those less familiar with market history, that US assets consistently outperform, but this widely held view is simply not accurate. As we now navigate a Trump 2.0 world, the global investment landscape has shifted and so too will the opportunities.
A diversified portfolio that still has a reasonable allocation to US assets but also accepts the opportunities in Europe, Asia, and Latin America, amongst others, is the best and safest way to invest for the future. In the last few weeks, we have had several clients asking for portfolios to have no US exposure. This latest aversion by some to US investment might well stem from a dislike of Trump policies, but in any event, we invest on behalf of clients where we think we can get the best risk adjusted returns and US stocks bonds are still very much part of the equation.
“Should I be concerned by the falling dollar?”
Answer:
The dollar’s recent weakness is notable and reflects the US administration’s wish that a weaker dollar would help US exporters, among other reasons. There has been a ‘sell America’ narrative in global markets for much of the last few weeks.
Over the previous few years, US stocks, bonds, and the dollar have all been bought by many global market participants and nowhere is home bias greater than when Americans are buying America.
Some investors undoubtedly question the US’s reliability as an anchor in global financial markets or many other spheres; however, currency movements are a normal and expected part of investing for globally diversified portfolios. Some of the funds we hold have various currency hedging strategies to limit the effects of currency moves. Still, it’s also possible for some managers to benefit from currency changes. As with all things emanating from the current US administration, it’s important to realise we don’t know the extent of what ‘weakening the dollar’ actually means; how weak is too weak?
This communication is designed for professional financial advisers only and is not approved for direct marketing with individual clients. These investments are not suitable for everyone, and you should obtain expert advice from a professional financial adviser. Investments are intended to be held over a medium to long term timescale, taking into account the minimum period of time designated by the risk rating of the particular fund or portfolio, although this does not provide any guarantee that your objectives will be met. Please note that the content is based on the author’s opinion and is not intended as investment advice. It remains the responsibility of the financial adviser to verify the accuracy of the information and assess whether the OEIC fund or discretionary fund management model portfolio is suitable and appropriate for their customer.
Past performance is not a reliable indicator of future performance. The value of investments and the income derived from them can fall as well as rise, and investors may get back less than they invested.
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