This piece is sponsored by The First National Bank in Sioux Falls.
“I’m a golfer, so there’s a lot of focus on golf that comes around the process and not worrying about the results. And if you continue to stick to that process … then, ultimately, the results come. I think investing is very similar.”
With ripple effects from recent tariff policies, the thought of investing in today’s stock market can feel off-putting and, quite frankly, scary for the novice investor.
But with the right process, according to Vanguard senior portfolio specialist Bill Puggini, the current economy can be about more than just withstanding market volatility — it can be an opportunity to increase your gains in the long run.
Puggini sat down with local financial experts Adam Cox and Kyle Cipperley for an episode of the Sioux Falls podcast “Common Cents on the Prairie.”
Together, they shared these three tips for weathering tariffs and stock market volatility.
Start with a good plan
Entering the year, there were three main factors contributing to the challenging economic environment: high equity valuations, economic policy uncertainty at an all-time high and tight monetary policy.
“I think what has driven the more recent volatility has been an even further uptick in uncertainty and particularly around tariff announcements,” Puggini said.
“There’s been some uncertainty around what ultimately is here to stay, what that policy will look like over the long term and, ultimately, the economic fallout of that.”
The main components of said fallout would be slower overall growth in the U.S. and global economies and an increase in inflation.
Because of the potential for a fallout, Puggini said, “anytime there’s volatility, there’s sort of pressure to do something.”
He advises, though, that investors start with a good plan and then stay the course. According to Puggini, a good investment plan consists of the following:
“Our late founder, Jack Bogle, is famous for saying ‘Stay the course,’” Puggini said. “It’s a little bit of our mantra here at Vanguard. And that doesn’t mean do nothing, but certainly, it means doing all the things that I just mentioned … making sure that you have the right plan in place and that you’re executing that plan.
“And if you’re not executing that plan,” he added, “then making the necessary moves to make sure that you get back in line.”
Grab opportunities to set yourself up for future success
“Usually, volatility comes when you have something to worry about, and that’s what creates that volatility,” Puggini said. “But that’s ultimately what creates opportunity for investors.”
When most people are eyeing a new pair of shoes or a nice golf club, they jump on the item as soon as it goes on sale.
According to Puggini, that mentality doesn’t apply as often when stock prices go down.
“When stock markets are down, you don’t necessarily tend to get that same feeling of ‘This feels really good. Let me go buy this,’” he said. “It tends to be a little bit more of a challenging environment to buy into, but it’s still a similar concept.”
By buying in when the market is down, investors can purchase stocks for high-level companies at more of a bargain-level price.
In the long run, and especially when combined with diversification, this strategy has the potential to bring investors better gains on cheaper buy-ins.
Approach forecasts with caution
“All models are wrong, some are useful.” It’s a quote attributed to statistician George Box.
“I think that’s a really important thing to keep in mind coming in,” Puggini said of Box’s sentiment, “because if you knew exactly what was going to happen with markets, you’d probably only invest in one thing — and that would be whatever the best return is going to be.”
Rather, he suggests using forecasts more so to set expectations.
“Knowing, hey, what are the current conditions,” he said, “and how does that affect the relative attractiveness and the returns I can expect to get over the next decade?”
When used properly — and not as a guarantee for future returns — forecasts serve as a helpful tool for investors.
Even so, Puggini said, “it’s about setting expectations and using that as a guideline but not necessarily changing your investment mix because of that.”
Puggini discussed even more on First National Wealth Management’s podcast about the causes of recent market volatility and what investors should be doing. Watch the full episode at the player below, or listen on your favorite streaming app!
And if you want to talk with an expert about your own investment strategy, reach out to the team at First National Wealth Management; they’d be happy to have a conversation.
Any comments, insights or strategies discussed in this article are intended to be general in nature and, therefore, may not be suitable for you and your situation, whatever that may be. Before acting on anything written here, please consult with your attorney, CPA, and/or your financial advisor.
