A Brief Note on Market Uncertainty
How to manage your response to market turbulence
As of this writing, the markets look set for a down day in response to the new U.S. tariffs. Well functioning markets should decline in value in response to higher uncertainty, which the tariffs bring to the table.
But this is not a post about tariffs or their impact.
This is a post about how we respond to events that cause uncertainty and therefore market volatility.
Over the course of any investing career, there will be sharp market sell-offs and each will have their own flavor. What’s consistent in each, however, is contagious worry among investors. What will happen next? Could the markets fall further?
These things are outside of our control. What we can control is how we respond in such times. If you find yourself getting caught up in the headlines, I recommend stepping away from the news cycle and social media and learn about a great business.
It’s in periods of uncertainty where wonderful businesses led by exemplary stewards of capital are meant to shine. While competitors panic, they adjust and take market share. While their stock prices decline, they’re buying back stock at a better price. When uncertainty subsides, they are in the pole position.
In over twenty years of investing, my best investments occurred in periods of uncertainty - either about the company or about the market as a whole. The better we know our companies, the better we can recognize irrational worry and capitalize on opportunities.
When I write my monthly Flyover Stock company profiles, I don’t pick them based on whether they’re undervalued in that moment. Instead, I prioritize quality, knowing that at some point they’ll get cheap. I’d rather start with quality and hope for value than start with value and hope for quality.
Stay patient, stay focused. (Now more than usual)
Todd
Todd Wenning is the founder of KNA Capital Management, LLC, an Ohio-registered investment advisor that manages a concentrated equity strategy and provides other investment-related services.
At the time of publication, Todd, his immediate family, KNA Capital Management, LLC and/or its clients do not own shares of any company mentioned.
Please see important disclaimers.