Markets in Motion – Managing Through Volatility
By Sharon Allen, CFP®, CTFA and Daly Andersson, CFA, CFP®
Investing in the stock market can be a humbling experience.
Time and time again, studies show us that acting on our natural human instincts and emotions is often detrimental to our investment outcomes. But in the face of uncertainty and fear, many of us feel the need to “do something”. Tolerating this discomfort requires us to have patience, discipline, and some level of hope or optimism for the future. So, how do you fight the urge to “do something” when you know you can’t control the market (or much of anything else on the grand stage)?
At Sterling, we are both disciplined in the discomfort, and optimistic about the future when investing on your behalf. Given the current investment environment, we want to take a moment to share what we have already done and what we are doing for you right now.
What Sterling Has Already Done for You
The most impactful work is done early on and monitored and adjusted as you go. As Alexander Graham Bell put it, “Before anything else, preparation is the key to success.” From the start of our work together, we have been helping you build resilience throughout your financial life. Starting by evaluating your entire financial house, we identify the areas where improvement is necessary, and we work to grow and bolster your financial foundation. An integral part of this foundation is your investment portfolio.
- Designing and Growing Your Financial Foundation – One of the most important decisions that we make together is the mix of stocks, bonds, and cash to target within your portfolio – a decision that is determined through understanding your investment time horizon, the timing and amounts of anticipated withdrawal needs, and your ability to withstand volatility among other factors. Your asset allocation is designed and tailored in an effort to balance a level of long-term defensiveness and growth necessary for your unique financial situation. Empirical evidence has supported the thesis that asset allocation is one of the most important determinants of the variation in portfolio returns over time, demonstrating more impact on portfolio variation than other factors like security selection and market timing (Ibbotson & Kaplan, 2000). So once this optimal starting block is in place, we work to build the portfolio using a wide and diversified range of investment opportunities.
- Ongoing Proactive Management of Cash Needs – As part of our disciplined strategy, your team at Sterling regularly reviews upcoming and anticipated future cash needs to ensure that there is sufficient cash and or fixed income resources on-hand to accommodate up to two years of regular distributions. In addition, if we know that you have large cash needs, we are proactively planning for that, as well.
- Implementing the Best Ideas in Financial Science – Our in-house Investment Committee reviews client portfolios regularly to verify adherence to your unique target allocation, portfolio needs, and circumstances. Your Sterling team regularly invests time to enhance their knowledge and competence in the field of investment and wealth management, curating and incorporating some of the best ideas within the industry to your portfolio design. Within the last 12 months, we have focused on including additional complementary strategies within client portfolios with the intention of enhancing risk-adjusted returns over time. Some of the adjustments we have made to portfolios over the last year include adding an additional factor-based approach called “High Profitability” to our equity allocation and re-working the weightings of some of the diversifying asset classes like Emerging Market Equity and Real Estate to maintain a market-neutral exposure.
What Sterling Is Doing for You Now
What are the smart things that we are doing today to navigate through the current volatility in markets?
- Maintain Discipline – The most important thing that we can do now – and the smartest – is maintain the course and stay disciplined. To do otherwise runs the risk of undermining long-term financial success. We want to ensure that temporary paper losses do not become permanent ones. The market does not announce when challenging times have “ended”. As you can see from the chart below, trying to wait out market volatility on the sidelines often leads to significant underperformance. Many of the best consecutive days of market returns are achieved in periods following market lows.
The Cost of Trying to Time the Market

Source: Dimensional Fund Advisors 2024
- Seeking Out Planning Opportunities – Our team is working diligently to find opportunities within these market environments – whether in the form of tax loss harvesting, accelerating cash investments, Roth conversion, or increasing taxable gifting strategies. We desire to support you in making your financial house stronger and stewarding your resources in a savvy way.
Next Steps
Warren Buffet eloquently put it this way: “Human potential is far from exhausted, and the American system for unleashing that potential – a system that has worked wonders for over two centuries despite frequent interruptions for recessions and even a Civil War – remains alive and effective.” This statement is as true today as it ever was.
Any meaningful drawdown may be different from another, but it’s never different enough to permanently impact the long-term innovation and financial performance of American growth in aggregate. Whatever the tumult and challenge that Americans face, there is always a path forward. It may not always be readily apparent or easy (and it usually isn’t), but time and progress have a way of bringing us through to the other end. When limits are tested, ingenuity kicks in. Strive to find your hopefulness despite the uncertainty that abounds. And know that you are not alone.
Sources & Disclosures
Dimensional Fund Advisors (2024). The Cost of Trying to Time the Market Dimensional Quick Take.
Ibbotson, R. G., & Kaplan, P. D. (2000). Does Asset Allocation Policy Explain 40, 90, or 100 Percent of Performance? Financial Analysts Journal, 56(1), 26–33. https://doi.org/10.2469/faj.v56.n1.2327
The information in this material is intended for the recipient’s background information and use only. It is provided in good faith and without any warranty or representation as to accuracy or completeness. Information and opinions presented in this material have been obtained or derived from sources believed by Sterling to be reliable, and Sterling has reasonable grounds to believe that all factual information herein is true as at the date of this material. It does not constitute investment advice, a recommendation, or an offer of any services or products for sale and is not intended to provide a sufficient basis on which to make an investment decision. Before acting on any information in this document, you should consider whether it is appropriate for your particular circumstances and, if appropriate, seek professional advice. It is the responsibility of any persons wishing to make a purchase to inform themselves of and observe all applicable laws and regulations. Unauthorized reproduction or transmission of this material is strictly prohibited. Sterling accepts no responsibility for loss arising from the use of the information contained herein.
Risks: Investments involve risks. The investment return and principal value of an investment may fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original value. Past performance is not a guarantee of future results. There is no guarantee strategies will be successful. Diversification neither assures a profit nor guarantees against loss in a declining market.