Whether you’re an experienced investor or new to the market, 2025 has brought an unprecedented degree of simultaneous market momentum and uncertainty. The first half of the year saw both sharp market swings and heightened volatility, leaving many investors feeling like they’re navigating uncharted waters.
With shifting tariff policies, proposed tax cuts, and a potentially higher federal deficit, market stability might seem like a distant opportunity. But it’s important to remember that in uncertain times, practical investment principles matter more than ever.
Below, we share four pragmatic investment principles based on Carson’s 2025 Midyear Outlook that can help you navigate an uncertain market. To fully explore Carson’s investment forecasts, predictions for future Fed strategies, and recession risk, download the full Carson 2025 Midyear Outlook report.
Download the Full 2025 Outlook
1. Stay Nimble: Market Conditions Can Shift Quickly
Staying nimble as an investor is crucial right now because current market conditions are highly dynamic and shifting rapidly. You must be adaptable in the face of market challenges like the following:
- Rapid policy shifts and market reactions due to President Trump’s efforts to reshape the U.S. economy. The quick reversal of extreme tariffs in April, influenced by strong market messages, demonstrates how policy decisions can immediately impact the investment market outlook and investor sentiment. The “whiplash theme” of the current administration’s economic agenda necessitates investor readiness to adjust to sudden changes in fiscal policy.
- Uncertainty and unpredictability given the difficulty of economic forecasting due to the unusual level of policy influence in the market right now. The uncertainty around tariffs, their consequences for inflation and interest rates, and the loosening of regulatory restraints on businesses highlight the need for investors to remain flexible rather than rigidly adhering to a single investment forecast.
- Bull market corrections that can create the appearance of a bear market, as with the first half of 2025 when the S&P was down nearly 19% at one point. But even a young bull market like the current one—which is 31 months old, compared to an average bull market length of 67 months—can experience rough periods. And the first half of the year exemplifies how significant pullbacks can happen even when economists expect long-term bullish trends. Surprises and periods of weakness are a normal part of market cycles.
The best way to help protect your investments from market volatility is through robust portfolio construction and diversification. Rather than reacting to negative market news, you should strategically position your portfolio to limit losses and reduce fluctuations in investment returns without sacrificing too much potential gain. At the same time, be open to rebalancing your portfolio as both challenges and opportunities arise.
2. Sentiment Is Not a Strategy
It’s also important to avoid overreacting to headlines or social media narratives and making investment decisions based on a fleeting sentiment. Reacting to market shifts rarely leads to good decisions and can derail long-term strategies.
While there has been a lot of chatter about the potential for a recession in 2025, there is currently no hard data pointing to a hard market downturn in the next 12 months. The Carson Proprietary Leading Economic Index (LEI) indicates the economy is growing close to trend, with no broad and deep deterioration of economic activity. Economists also expect that fiscal stimulus and deficit spending resulting from the Big Beautiful Bill will likely counteract recessionary pressures.
Thus, it’s important as an investor to focus on the data, not emotions or political feelings, while also being prepared for periodic rough patches in the market. Volatility is the toll you pay to invest, and it’s important to keep in mind that a 10% market correction happens, on average, once a year.
The bottom line? Focus on long-term planning while acknowledging short-term volatility.
3. Portfolio Construction Matters—Especially Diversification
Classic investment principles like diversification are crucial in volatile markets. Build a portfolio that can withstand various economic environments, recognizing that different diversifiers work at different times. For example, intermediate Treasuries and gold provided investors with stability during the near-bear market in the first half of the year.
Right now, tariff uncertainty, the Fed’s tight monetary policy, and global trade and economic challenges represent significant risks to investors. But these diversification tips can help you weather any rough seas ahead:
- Build a robust portfolio that is resilient to various market conditions.
- Don’t rely solely on bonds for diversification. Different diversifiers work at different times, so consider other assets like gold or broad commodities, which have sometimes been better diversifiers during major stock drawdowns.
- Rebalance your portfolio, especially in times of uncertainty.
- Consider investing in undervalued stocks in both domestic and international markets.
- Invest internationally to increase diversification. International stocks have significantly outperformed domestic ones this year, underscoring the benefit of global exposure.
4. Find a Trusted Advisor Who Understands the Terrain
As you navigate today’s uncharted waters and rapid market changes, it’s important to have a trusted guide who can help you avoid being distracted by market noise and investor fearmongering. The Carson Wealth team has deep experience in interpreting complex macroeconomic data—like our proprietary LEI (Leading Economic Index)—and can help you understand the investment market outlook, risks, and opportunities. The goal? Better client outcomes in turbulent times.
As you evaluate a potential advisor to help you sail through market headwinds, consider asking them these questions:
- How do you adjust investment strategies during volatile markets?
- Can you share examples of how you’ve guided clients through past downturns, like in 2008 and 2020?
- What tools or tactics do you use to help protect portfolios from severe losses during downturns?
- How do you personalize risk tolerance for individual clients?
- How often will you review my portfolio during turbulent periods?
- What’s your approach to keeping clients calm and informed during volatility?
- How do you measure success in volatile markets (e.g., downside capture ratio), and what’s your long-term performance track record during unstable periods?
Carson Wealth can help you find the right professional expertise for your individual circumstances, goals, and risk tolerance. Match with one of our trusted advisors today.
Stay Grounded, Stay Invested
When markets are volatile and the economic outlook uncertain, many investors make the mistake of pulling out of the market. But the surest way to weather any economic storm is to stay the course with long-term goals:
- Be adaptable to changing conditions.
- Avoid making investment decisions based on emotions.
- Maintain a diversified, balanced portfolio.
- Find support and guidance from a trusted advisor.
“[The year] 2025 has brought a lot of policy noise and very little clarity,” says Sonu Varghese, VP, Global Macro Strategist, at Carson Group. “But even in uncharted waters, the same rules of navigation apply. It’s not just about predictions—it’s about building a well-diversified investment portfolio that serves as a financial plan equipped to ride out the waves.”
For more insights on market conditions and investment forecasts, download the full 2025 Midyear Outlook.
Chart Your Course with Us
We could all use a trusted first mate when navigating challenging seas. We can help you chart your financial course with purpose and pragmatism. Connect with one of our professional advisors today.
Sonu Varghese is a non-registered associate of Cetera Wealth Services, LLC (formally Cetera Advisor Networks, LLC).
The views stated in this article, newsletter are not necessarily the opinion of Cetera Wealth Services, LLC or CWM, LLC, and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.
A diversified portfolio does not ensure a profit or protect against loss in a declining market.
