In recent months, investors have witnessed sharp swings in the financial markets—fluctuations driven by inflation concerns, changing interest rates, geopolitical tensions, and economic uncertainty. While the headlines may seem alarming, the reality is that volatility is not only normal but also expected in the lifecycle of any market.

At ExperityCPA, we understand that uncertainty can be unsettling, especially for business owners and high-net-worth individuals making important decisions about investments, business growth, and long-term financial planning. That’s why we’re breaking down what recent volatility means—and what it doesn’t.

Understanding Market Volatility

Market volatility refers to the rate at which the price of assets—stocks, bonds, and other financial instruments—fluctuate over a given period. While large market swings may feel unusual, they are a natural part of the investing cycle. In fact, according to historical data, the S&P 500 has averaged three declines of 5% or more every year since 1928.

Recent movements, such as those we’ve seen in response to Federal Reserve policy decisions or international conflicts, are part of a broader recalibration in investor sentiment. It’s important to keep in mind that volatility is often short-term and is frequently followed by periods of growth.

Why Staying the Course Matters

Emotional reactions to market dips often lead to costly mistakes—like panic selling or abandoning long-term strategies. A study by Schwab found that those who stayed invested during turbulent times consistently outperformed those who tried to time the market.

At ExperityCPA, we encourage clients to take a disciplined, long-term approach. This means maintaining a diversified portfolio, aligning investments with your personal and business goals, and resisting the urge to make knee-jerk decisions during downturns.

How We Help Clients Thrive in Uncertain Times

As a strategic partner to entrepreneurs and forward-thinking investors, our role goes far beyond tax compliance. During periods of volatility, we help clients:

• Stress-test financial strategies to ensure they’re resilient under a variety of market conditions
• Model cash flow scenarios to support smarter decisions across business and personal finances
• Adjust tax planning strategies to take advantage of potential losses or gains in a tax-efficient way
• Coordinate with financial advisors and wealth managers to align investment decisions with broader financial goals