At market close on 8 April, the S&P 500 posted its steepest four-day drop since inception. Just one day later, a surprise announcement from Donald Trump—pausing reciprocal tariffs (excluding China)—sent the index soaring 9.52%, making it the third-best day since 1957, according to CNN.
It’s a powerful reminder of how quickly things can turn—and why trying to time the market can be so costly. We asked Elke for a few quick reflections on how investors should respond in times like these—or, if you missed it, revisit the video from our previous interview where she shared timeless strategies for riding out the storm.
Q Markets are in turmoil, making it tempting to want to ‘do something’. How should investors manage their emotions/fear during times like these?
The week following Donald Trump’s so-called ‘Liberation Day’ on 2 April felt like a whole year in the markets compressed into a few days, from coming to within a hair’s breadth of a bear market (a decline of 20% or more), only to rally almost 10% in a single day following one of his tweets.
The biggest mistake investors make, especially during large market swings, is to act on emotion. The reality of investing hasn’t changed: when you invest in the stock market, you essentially own part of a listed company. These are well researched companies, analysed and selected by a team of analysts and portfolio managers.
Investors typically get hurt when they try to time the market, choosing to exit during downturns and missing the rebound. The first few days in April offered another reminder of how quickly everything can change. Missing just one big rally day – like a 9% surge – means missing a significant portion of the recovery.
Q What are the implications of selling out of a long-term investment and switching into the perceived safety of cash?
When you sell you essentially realise the “loss”. While markets always recover, the timing of the recovery is uncertain. Neither investors, nor economists or fund managers, can time the market with complete accuracy. History shows that missing just the 10 best-performing days in the S&P 500 over a 20-year period can halve your portfolio’s return. Equity is a long-term growth asset. Only about half the days in a year are positive, but they are what drive long-term returns.
If you switch to cash you not only realise the loss, but you now have the near-impossible task of trying to time your re-entry back into the market. That is why diversification between asset classes within a portfolio is imperative. Having a mix of cash and bonds as part of your strategy is important to manage market cycles. Should there be a need for a withdrawal during a downturn, you can take from there without locking in equity losses.
Q Is it even possible to time the market?
No, history has shown us time and again that trying to time the market leads to poor outcomes. As Peter Lynch famously said: “Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves.”
Q What can we learn from previous huge market shifts such as the Global Financial Crisis, and more recently, the COVID market meltdown?
As human beings, we are wired for loss aversion. We do not celebrate the gains in market cycles even remotely as deeply as we experience loss, or the idea of loss. That’s why managing emotion is often more important than managing the investment portfolio itself. Looking back over the past 70-75 years – which include recessions, wars, pandemics, and market crashes—we see a consistent pattern: markets recover. And often, they bounce back faster than expected.
Q What value can a financial advisor play during these volatile and uncertain times?
A financial advisor can ensure that your portfolio has the correct strategy. By diversifying your investments across asset classes, managers, and geographies, your portfolio is built for all conditions—what Ray Dalio calls an “all-weather” strategy. This approach allows you to sit on your hands and ride out market volatility.
More importantly, an advisor provides perspective. They help take the emotion out of decision-making, allowing you to stay the course when markets feel chaotic.
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