Staying Steady when Markets Feel Uncertain
The stock market is providing its biggest test to investors in several years
By: Roné Swanepoel Head of Sales Morningstar Investment Management South Africa
Ken Griffin—founder of Citadel, a powerhouse in both active investing and market infrastructure—once recounted his investing losses to a group of college students, saying:
“All my losses are tuition, and I have the most expensive education in American history. If every time you lost money, you got depressed and angry, you couldn’t deal with it, you’d have a short career.” Griffin continued: “It doesn’t mean you don’t think long and hard about what’s going on, but you have to keep it in perspective.”
It might be the perfect quote for the current moment.
Early April brought the largest two-day decline for US stocks since March 2020, with markets falling 11% on April 3 and 4.
Fear surged—measured by the Volatility Index (VIX)—to its highest levels since last August.
In short, investors are paying their tuition. Financial markets are leading the nightly news, more people are paying attention, and many are asking questions that follow a logical path of “how much worse can it get?”
The potential ripple effects from tariffs are the center of attention:
- Will companies pull back on spending?
- Will that lead to layoffs?
- Will other countries retaliate?
- Does all this tip us into a recession?
All valid questions. But perspective—especially one that stretches beyond the next six months—is essential. These moments are when markets truly test us. Loss aversion—the idea that losses hurt more than gains feel good—can shape our decisions. Put simply, human nature can work against us.
For context, 2022—the last time we entered a bear market—offers a telling case study. Many investors began shifting into more conservative assets: multi-asset income funds, money market funds and bonds. In doing so, they reduced their exposure to stocks.
In hindsight, many of those decisions were driven by doing what was comfortable, rather than what was rational. It turned out to be a mistake—one worth remembering as we move forward. One of the simple truths of investing is that volatility often begets more volatility. Market swings tend to cluster—meaning the worst days are often followed closely by the best.
Since 2002, using the Morningstar US Market Index, seven of the 10 best trading days occurred within just two weeks of the 10 worst.
Going to cash to avoid volatility can feel like a safe choice—but it’s often an expensive one. Why? Because by the time the dust settles and things feel safe again, the market may have already moved on. In short, volatility is the price of admission. Stocks offer the greatest long-term rewards, and volatility is the trade-off. Putting that into context, since 1928, US stocks have delivered an annualized return of 10%, or 6.9% after inflation. By comparison, 10-year Treasuries have returned 4.5% (1.5% after inflation), and 3-month T-bills have returned 3.3% (0.3% after inflation).
Volatility isn’t something we can avoid—it’s something we must manage. That’s where diversification, a clear financial plan, and active rebalancing and management through a trusted investment partner matter. But above all, an investor’s own behavior is the critical swing factor during market volatility.
Markets humble everyone, even the most experienced investors. Drawdowns can feel personal, especially when headlines are loud and uncertainty is high. But as Ken Griffin put it, those losses are tuition—the cost of participating in an endeavor that, when approached with discipline and perspective, can be immensely rewarding over time.
What separates successful investors isn’t the absence of losses—it’s the ability to learn from them, stay grounded, and remain committed to the process. The market is always teaching. The question is: Will we stay in our seats and keep learning?
Because in the long run, it’s not about avoiding volatility—it’s about learning how to navigate through it.
Risk Warnings This commentary does not constitute investment, legal, tax or other advice and is supplied for information purposes only. Past performance is not a guide to future returns. The value of investments may go down as well as up and an investor may not get back the amount invested. Reference to any specific security is not a recommendation to buy or sell that security. The information, data, analyses, and opinions presented herein are provided as of the date written and are subject to change without notice. Every effort has been made to ensure the accuracy of the information provided, but Morningstar Investment Management South Africa (Pty) Ltd makes no warranty, express or implied regarding such information. The information presented herein will be deemed to be superseded by any subsequent versions of this commentary. Except as otherwise required by law, Morningstar Investment Management South Africa (Pty) Ltd shall not be responsible for any trading decisions, damages or losses resulting from, or related to, the information, data, analyses or opinions or their use.
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The Morningstar Investment Management group comprises Morningstar Inc.’s registered entities worldwide, including South Africa. Morningstar Investment Management South Africa (Pty) Ltd is an authorised financial services provider (FSP 45679) regulated by the Financial Sector Conduct Authority and is the entity providing the advisory/discretionary management services.