From Panic to Planning: Investment Portfolio Management Lessons for 2025

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Panic-to-Planning

Savio Keith – Investment Analyst

A steady approach to navigating market uncertainty with confidence and clarity.

Anxious investor to confident planner, financial decision making

Economic Impact

Despite broad concerns that these policy shifts could negatively impact U.S. economic growth (and, by extension, global growth), the U.S. economy enters this turbulent period from a position of strength. This is evidenced by the stability in the employment situation; steady economic growth of 2.4% in Q4 2024; and moderated inflation, as seen in slowing PCE and CPI inflation data. These factors provide reasonable buffers, suggesting that any slowdown in growth is less likely to devolve into prolonged economic contraction.

Stable U.S. economy with GDP growth employment data

Stock Market Impact

Due to the impact of the aforementioned trade policies, declining sentiment, and weakening confidence, the markets have since erased all post-election gains, while also experiencing significant volatility as they reacted sharply to new developments throughout the period.

On a year-to-date basis, as at April 1st, 2025 (prior to “Liberation Day”):

  • The S&P 500 Index was down 4.23%
  • The Nasdaq Composite Index was down 9.64%
  • The Dow Jones Industrial Average was down 1.30%

Between April 2nd and April 8th, a period covering Liberation Day through to the day before the announcement of the 90-day pause:

  • The S&P 500 Index declined by 12.14%
  • The Nasdaq Composite Index declined by 13.26%
  • The Dow Jones Industrial Average declined by 10.85%

Following the announcement of the 90-day pause on April 9th, there was a massive rebound in the markets, with:

  • The S&P 500 Index posting a one-day gain of 9.52%, one of its biggest one-day gains since World War 2
  • The Nasdaq Composite Index posting a one-day gain of 12.16%, its largest one-day jump since January 2001
  • The Dow Jones Industrial Average posting a one-day gain of 7.87%, its largest one-day point gain on record

Nonetheless, despite this recovery, the markets remain down on a year-to-date basis. As at April 11th, 2025:

  • The S&P 500 Index is down 8.81% YTD
  • The Nasdaq Composite Index is down 13.39% YTD
  • The Dow Jones Industrial Average is down 5.48% YTD

Periods of elevated volatility are particularly challenging for investment portfolio management, as stock prices tend to swing sharply in both directions. While there can be substantial upside moves, the downside risks are equally significant, and portfolio values can quickly erode. These swings can create anxiety, affecting not only investment portfolio management decisions, but also broader personal finance budgeting considerations for households experiencing uncertainty. In such environments, short-term market noise can obscure long-term strategies, leading to emotional or reactive investment decisions.

Stock market decline in early 2025 shown as a sharp downward trend graph

Roadmap for Rough Times: Effective Investment Portfolio Management

  • Stick to your strategy: Emotional or reactive investment decisions are common during times like these. The “noise” can create a sense of urgency, but rash decisions often backfire. Staying calm and adhering to your investment portfolio management strategy helps you avoid costly mistakes and block out distractions, allowing you to see the bigger picture more clearly. Such discipline is not only critical during periods of market stress, but it also forms a foundational principle of effective long-term wealth management planning.
  • “Time in the market is better than timing the market”: Empirically, bear markets typically last less than a year, and research shows that staying invested generally leads to better long-term returns than pulling out of the market and holding cash. Moreover, this approach often outperforms strategies that attempt to time the market by exiting during downturns and re-entering during rebounds. Ultimately, staying invested over the long term allows you to ride out short-term volatility and benefit from market growth over time – a key principle reinforced by many wealth advisory firms.
  • Change what you can and accept what you cannot: While we cannot control market volatility or influence stock prices in our favour, we can control how we allocate our investments as part of a disciplined investment portfolio management strategy. During times of heightened volatility and uncertainty, safety and quality taste sweeter. You can focus on investing in high-quality companies with strong track records and financial performance (“invest in companies, not stocks”), or diversify your portfolio into other asset classes to reduce market exposure. Aligning these choices with your broader wealth management planning goals is essential.