Fear in the Public Markets: How to React During Times of Market Tension | AWM Insights #228

Key takeaways:

• Current volatility is driven by sticky inflation, central bank restraint, and a shift from optimism to realism.

• Risk and downturns are required for earning higher returns than cash or short-term bonds.

• Chasing headline gains and swinging for home runs in public markets usually results in striking out.

• Sticking with a well-built lineup and playbook, instead of reacting to short-term noise, is essential for lasting success.

• A diversified, purpose-built portfolio managed with professional discipline offers stability when markets get noisy.

Setting the Stage Market Volatility Is the Norm, Not the Exception

Check the market scoreboard this week and you’ll see plenty of red—tech stocks down, the S&P 500 retracing from its highs, Bitcoin off nearly 30 percent since peak, and the volatility index lighting up. Yet most portfolios are still up double digits for the year—a stat plenty of teams would tape to the clubhouse door.

What’s fueling this return of uncertainty? Themes echo throughout the financial press: sticky inflation refuses to fade, central banks stay patient and cautious on rate cuts, and big tech’s rapid growth is being put under the microscope. Optimism that dominated earlier in the year is shifting. Reality is stepping in, and the conversation now centers on whether recent gains were too good to hold. From the field to the boardroom, savvy teams know momentum ebbs and flows. A healthy game always features hot streaks, cold spells, and everything in between.

Why Risk and Volatility Build Champions

Consistent returns require taking on risk, plain and simple. The cost of entry for building true wealth is journeying through volatility—those swings that make even the most seasoned pros flinch. If markets only moved up, returns would be bland, no sweeter than a risk-free bond.

Look at the numbers: the S&P’s five percent pullback still leaves investors up 13 percent this year. That’s not a collapse—it’s a reminder of how markets behave. As in professional baseball, not every at-bat ends with a home run. And trying to swing for the fences too often? That’s when most players strike out. History shows that accumulating singles and doubles, “playing small ball,” consistently outperforms the flash-in-the-pan attempts to chase every new headline. When Bitcoin soars or hot stocks run, remember: the worst hits often follow the loudest cheers.

Discipline Above All Trusting Your Lineup

True success comes from sticking to a prepared lineup. A well-constructed, diversified portfolio is like a team set up for an entire season, not just a single inning. The role of the coach—your family office—isn’t to call audibles on every market dip, but to weather storms by trusting the plan you spent months building. When volatility kicks up, resist the urge to chase gold, Bitcoin, or whatever’s dominating the news. The evidence is clear: jumping from fad to fad usually leaves you watching from the dugout instead of rounding the bases. The right mix of hitters—diversified assets, planned positions, rebalanced as needed—beats a lineup built on impulse.

Consistent Play Wins the Series

Winning teams don’t flinch when the scoreboard flickers. Neither should long-term investors. Success is born from following the playbook, embracing the role of risk in wealth creation, and refusing to be rattled by noise from the crowd. By sustaining consistent effort—hitting singles, advancing runners, keeping focus when others panic—you set the stage for generational victories. Market swings will come and go, but discipline and preparation put you in position not just for the next inning, but for a century of family success.