Weathering the storm: tips to navigate volatile markets
The Sandbox Daily (1.10.2025)
Welcome, Sandbox friends.
Before we begin today, I’d like to express my heartfelt condolences to the Los Angeles community and all the families and businesses who have lost everything in the California wildfires. You are in our thoughts and prayers as you navigate through this incredibly challenging time. Best wishes to you.
Today’s Daily discusses:
tips to navigate volatile markets
🧁 weekend sprinkles 🧁
Let’s dig in.
Blake
Markets in review
EQUITIES: S&P 500 -1.54% | Nasdaq 100 -1.57% | Dow -1.63% | Russell 2000 -2.22%
FIXED INCOME: Barclays Agg Bond -0.56% | High Yield -0.52% | 2yr UST 4.383% | 10yr UST 4.763%
COMMODITIES: Brent Crude +3.54% to $79.64/barrel. Gold +0.98% to $2,717.1/oz.
BITCOIN: +3.26% to $94,581
US DOLLAR INDEX: +0.42% to 109.641
CBOE TOTAL PUT/CALL RATIO: 0.95
VIX: +8.14% to 19.54
Quote of the day
“Ambition without action becomes anxiety.”
- Luke Harlan
Weathering the storm
“Volatility can prey on investors’ emotions, reducing the probability they’ll do the right thing.” -Howard Marks, Oaktree Capital Management.
Market volatility creates uncertainty and stress for many investors, but it also presents opportunities for those with the right framework and mindset.
Understanding how to stay calm and make informed decisions during turbulent times is key to protecting your capital and achieving long-term success.
Below we’ll explore a few ideas and strategies to successfully navigate market fluctuations and maintain a steady course toward your financial goals.
Downturns are perfectly normal.
[Internalize this. Then say it one hundred times over.]
When markets get choppy – and they always will – it pays to have an investing plan and stick with it.
Staying disciplined and focused on your long-term goals can help you navigate short-term volatility without making impulsive decisions. A well-thought-out plan serves as your anchor, even when the market tries to throw you overboard.
Historically, U.S. stocks have experienced 3-4 downturns of 5% per year, 1 correction of 10% each year, and 1 bear market of 20% or more every 3-4 years. But, while market downturns may be deeply uncomfortable in the moment, history shows stocks have recovered and delivered gains for long-term investors.
Create a plan you can stick with – through market ups AND downs
Your personal mix of stocks, bonds, and alternative investments (commodities, crypto, real state, private equity etc.) will determine potential returns, but also, the inevitable swings in your portfolio along the way.
Volatility is dual-directional, contributing to the well-known downside moves but also to those oh-so-juicy upside thrusts we all enjoy so much.
Pick an investment mix that aligns with your goals, risk tolerance, timeframe, and financial situation, and, more importantly, one you can stick with despite market volatility.
As William Bernstein noted: “Investing is a psychological game. A suboptimal strategy you can live with and execute is better than an optimal one you can't.”
Focus on time in the market – not trying to time the market
As they often say, it’s about “time in the market, not timing the market.”
It is tempting to try to sell out of stocks to avoid downturns, but it's incredibly difficult to time it right. Once, maybe. But two or three or more times? That’s a fool’s errand.
In fact, the primary reason market timing is so hard is because the investor must time the market correctly twice. When to sell AND when to buy back in.
Also, if you sell and remain on the sidelines as the market cycle recovers, it can be difficult to catch up.
Missing even a few of the best days in the market can significantly undermine your performance. Here’s the calendar year return for the S&P 500 in 2023 and the impact on your return should you have missed the best days of the year.
Invest consistently, during good times AND bad times
Some of the best times to buy stocks are when fundamentals and/or technicals are at their worst. It’s definitely uncomfortable – and goes against our primal instincts – to buy something knowing there is a decent chance your investment will go down in price over the coming days, weeks, or even months.
But, as Jeff Ubben reminds us: “Volatility actually is the opposite of risk. It’s an opportunity. But you need to think through and fight some basic human weaknesses.”
Consistent investing can give you the discipline to buy stocks when they are at their cheapest or when valuations are above average. This means buying stocks irrespective of the market cycle. Consider setting a plan for automatic investment.
Perhaps setting up an investment schedule like a dollar-cost averaging (DCA) program will help offload any emotional burden and keep you process-oriented. While history shows an investor might be better off investing a lump sum all-at-once vs. a DCA plan, investors must always balance what the calculator says against how they actually feel about their investment portfolio in the real world.
We’re human, after all, and emotions are a part of the investment process.
Make the most of a down market
While no one likes to lose money, there are tools and strategies to take advantage of a down market.
During periods of market volatility and downturns, you may find opportunities to trim your tax bill by using tax-loss harvesting. Identify investments in your taxable brokerage account that have lost value since your purchase and consider selling them during the downturn to offset capital gains taxes on other investments. By realizing these losses, you can reduce your taxable income and lower your overall tax burden for the year.
Consider a hands-off approach
If you are not comfortable with market risk, consider turning your portfolio and the associated investment decision-making process over to a fiduciary through a managed account.
If you don't have a plan in place, or think yours may be off track, reach out for help. You future self will thank you.
In closing…
Market volatility is the ticket of admission for playing this game.
The feeling of losing control is something we’ve all experienced at one point or another. Without a plan and proper guidance, investors make reactive investment decisions that negatively impact their long-term financial goals.
With the right strategy and financial plan, not only can you figure out how best to manage your reactions to volatility, but you can also find ways to take advantage of these conditions for better portfolio growth.
Source: Ryan Detrick, Fidelity, YCharts, Nick Maggiulli, Napkin Finance
🧁 Weekend sprinkles 🧁
Here are the ideas, sights, and sounds that caught my attention this week – perfect for quiet time over the weekend.
Blogs
Sparkline Capital – Beyond the Magnificent 7 (Kai Wu)
Morningstar – Your Financial To-Do List for the Year Ahead (Christine Benz)
Microsoft – The Golden Opportunity for American AI (Brad Smith)
Financial Times - Top 10 Trends for 2025 (Ruchir Sharma)
The Irrelevant Investor – Stocks Are More Expensive Than They Used To Be (Michael Batnick)
Podcasts
a16z – How AI is Transforming Labor Markets (Spotify, Apple Podcasts)
Scott Galloway feat. Daniel Pink – How Regret Motivates Us (Spotify, Apple Podcasts)
To Live and Die in L.A. by Tenderfoot TV (Spotify, Apple Podcasts)
Movies/TV Shows
Squid Game 2 – Lee Jung-jae, Wi Ha-joon (Netflix, IMDB, YouTube)
Music
Cold War Kids – Santa Ana Winds (Spotify, Apple Music)
Teddy Swims – Bad Dreams (Spotify, Apple Music)
Kenrick Lamar feat. SZA – luther (Spotify, Apple Music)
Books
Matthew McConaughey - Greenlights (Amazon)
Pop Culture
Jon Gruden (Instagram)
That’s all for today.
Blake
Questions about your financial goals or future?
Connect with a Sandbox financial advisor – our team is here to support you every step of the way!
Welcome to The Sandbox Daily, a daily curation of relevant research at the intersection of markets, economics, and lifestyle. We are committed to delivering high-quality and timely content to help investors make sense of capital markets.
Blake Millard is the Director of Investments at Sandbox Financial Partners, a Registered Investment Advisor. All opinions expressed here are solely his opinion and do not express or reflect the opinion of Sandbox Financial Partners. This Substack channel is for informational purposes only and should not be construed as investment advice. The information and opinions provided within should not be taken as specific advice on the merits of any investment decision by the reader. Investors should conduct their own due diligence regarding the prospects of any security discussed herein based on such investors’ own review of publicly available information. Clients of Sandbox Financial Partners may maintain positions in the markets, indexes, corporations, and/or securities discussed within The Sandbox Daily. Any projections, market outlooks, or estimates stated here are forward looking statements and are inherently unreliable; they are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur.
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