Staying Invested in Volatile Markets: Strategy Over Silence
Experts at global wealth management firm Janus Henderson emphasize that remaining invested during periods of market volatility is often the most effective long-term strategy—but it doesn’t mean standing still. In a recent guide, they explain how thoughtful portfolio management during downturns can help reduce losses and make it easier for investors to stay committed to their plans.
“Markets move up and down, often without warning, and while these swings can feel uncomfortable, they are entirely normal,” says Matthew Bullock, Head of Portfolio Construction and Strategy for EMEA. “Each downturn may feel unique, but history consistently shows that markets have grown over time despite periodic declines.”
Data highlights how common these fluctuations are. Since 1928, markets have experienced 56 corrections—defined as declines of 10% or more. Bear markets, marked by drops of 20% or greater, occur roughly every 4.3 years. In practical terms, investors with a five-year horizon are likely to encounter at least one bear market. While not every downturn signals a recession, more severe declines have often aligned with economic slowdowns. When recessions do occur, they tend to deepen and prolong market losses, which is why forecasting them attracts so much attention.
Mario Aguilar De Irmay, Senior Portfolio Strategist, notes that investors often search for recession signals during volatile periods, but cautions against conflating markets with the broader economy. “Markets are forward-looking,” he explains. “They often reach their lowest point during a recession—not after it ends. Trying to time investment decisions around downturns can result in missing the recovery that follows.”
Understanding both the downturn and what comes next is essential. One key strategy is diversification across equity sectors, as different industries respond differently לאורך the economic cycle. Defensive sectors—such as healthcare, consumer staples, and utilities—have historically provided stability during market stress. However, as conditions improve, leadership tends to shift toward more cyclical sectors like financials, real estate, and technology, which benefit from renewed economic momentum.
Market capitalization is another important factor. Small- and mid-cap stocks are often viewed as riskier due to their higher volatility and sensitivity to domestic economic conditions. Their limited access to capital and more focused business models can weigh on performance during downturns. However, these same characteristics often enable them to rebound more strongly when the economy recovers.
Fixed income also plays a crucial role in portfolio resilience. Bonds can help stabilize returns during equity market declines and provide a more consistent income stream during volatile periods. While they are not immune to losses, higher-quality bonds have historically been more resilient than equities during downturns.
Importantly, diversification within fixed income is just as vital as diversification across asset classes. During sell-offs, government bonds and high-quality credit instruments typically offer greater protection. As markets recover, riskier segments such as corporate bonds often regain momentum alongside equities. “A disciplined approach to managing volatility can enhance outcomes,” says De Irmay, “but just as importantly, it helps investors stay invested.”
Ultimately, long-term investment success is shaped by the cumulative effect of market cycles. Historical trends show that bull markets tend to last longer and generate stronger gains than the losses incurred during bear markets. While downturns carry real risks, missing the recovery phase can be even more damaging.
Bullock concludes that working with a qualified financial professional and adhering to a well-structured long-term strategy is often the most effective path. “Staying committed to a carefully developed financial plan may sometimes mean avoiding unnecessary changes,” he says. “In many cases, choosing not to act is itself a strategic decision that supports long-term investment goals.”