The Stock Market Is Getting Turbulent: 5 Ways Investors Are Changing Strategies
Written by
John Csiszar
Edited by
Levi Leidy
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After two banner years of 20%-plus returns, the S&P 500 has stumbled hard in 2025. Although the index posted a solid gain of 2.7% in January, it’s been all downhill since, with the slide being exacerbated by the Trump administration’s imposition of tariffs on foreign nations.
On April 3 and 4, the market endured its biggest drop since the pandemic in 2020, and many pundits say even more volatility is on the way. But this is the tradeoff for the superior long-term returns offered by the U.S. stock market.
While staying the course is generally the right course of action for long-term investors, there are times when you might want to hunker down and play a little bit of defense during volatile market periods. This is particularly true if you are an older or risk-averse investor. Here are some ways you can change your investment strategy when the stock market is turbulent without completely upsetting your original asset allocation.
Adding Gold
Gold has long been considered a defensive asset because it is seen as a “store of value.” In other words, whereas stocks are just paper certificates — or, more commonly these days, electronic entries — they have no intrinsic value. Gold, on the other hand, is a physical asset that is beautiful, useful and desired by many around the world. Thus, many investors flock to gold during troubled times.
It’s perhaps no coincidence that gold has set numerous all-time highs already in 2025, at a price of $3038.42 per ounce on April 4, 2025.
Buying Defensive Stocks
One great way to maintain your allocation to stocks without putting your whole portfolio at risk is to shift into more defensive sectors. Although most stocks suffer damage during recessions, some actually trade up, or at least don’t go down as much as others. While high-flying tech stocks may see declines of 40%, 50% or even more, consumer staples stocks may even rise. Think of companies that supply products that people have to buy no matter what their financial situation, such as food, utilities and personal hygiene products.
Owning Bonds
Bonds have long been used in traditional portfolios as the counterweight to stocks. In fact, the traditional “balanced portfolio” usually allocates 60% to stocks and 40% to bonds.
Although bonds sometimes move in the same direction as stocks, they usually act as a balance that investors flock to when they are selling equities, a safe haven. This has proven true in the first quarter of 2025, with the yield on the 10-year Treasury plummeting from 4.78% on Jan. 13 to 4.00% on April 4, according to CNBC.
Dollar-Cost Averaging
Dollar-cost averaging is a great way to deal with market volatility because it requires you to invest regularly regardless of what the market is doing. This by definition means that you are buying more shares when the market is down and fewer when the market is high.
The money you invest via your dollar-cost-averaging program when the market is down 15% or 20% will provide greater gains for you over the long run. Perhaps just as importantly, dollar-cost averaging takes emotion out of the equation and requires you to invest when you might otherwise be too nervous to.
Picking Up Beaten-Down Shares
If you’re a long-term investor and you believe in your portfolio, there’s no reason not to pick up shares of your beaten-down companies. Although it can be tough to see red all over your account statement every day, given enough time, quality companies — and the major indexes — are highly likely to recover.
You may have to wait months or years, but buying when quality shares are “on sale” is a good way to boost your long-term returns. Just be sure to do your homework and ensure that your stocks are down due to market conditions and not poor business management or company-specific financial problems.
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