Ask the Expert Summer 2025

by Frances Flores, CFP®

This year has without a doubt already been eventful in terms of stock market volatility. The purpose of this article is to explore market volatility and offer actionable strategies that investors can use during volatile markets as well as their long-term investment plan.

Background

First, it is worth noting that intra-year market declines are common and are to be expected during any given year. History has shown us that the S&P 500 Index regularly undergoes average intra-year declines of over 10%, even during years when the economy is healthy and years that the markets finish positive. With most years having positive returns, and with long-term averages of over 9% per year, the stock markets are an attractive vehicle for long-term investors. Furthermore, the financial markets have historically always proven to be extremely resilient, having always overcome setbacks including economic downturns, government policy impacts, geopolitical events and wars, and even pandemics. The market’s historical resilience can give us strong confidence, while knowing that we are investing in strong companies that continue to grow with the world’s ongoing advancements in science, technology, healthcare, and innovation.

Diversification

When investing, a best practice is to spread one’s investments between multiple categories, or classes, of investments. Often referred to as Asset Allocation, this begins with investing in a mix of stocks, bonds, and cash. Within stocks, we diversify using U.S. stocks and international stocks, large companies, mid-sized companies, and small companies. Each of these classes of stocks can perform differently, and the combination of these classes of stock can help to reduce investment risk, effectively ‘smoothing out’ overall returns. This practice has already proven to be effective in 2025, as international stocks have mostly outperformed U.S. stocks.

Be prepared to invest in a down market, as per the contrarian philosophy of Mr. Buffett. The following techniques can be used to accomplish this:

Dollar Cost Averaging

A commonly used best practice is to invest monies periodically and on a regular schedule – this is called Dollar Cost Averaging. Using this approach, investors invest on a weekly, bi-weekly, or monthly schedule, using this disciplined and consistent approach. In the event of market declines, the investors are able to purchase shares at lower prices, effectively buying more shares at lower prices. This practice is often used by employees who save and invest via participation in their employer retirement plans (401k / 403b plans, etc.) but can be used by any investor who is able to invest periodically into the markets, including times of market volatility. By using dollar cost averaging, the investor can maintain confidence knowing that they are “buying low” into market declines, using a disciplined investing practice, while avoiding the temptation to try to time the market. This strategy can potentially provide higher investment returns over time.

Rebalancing

Rebalancing is the process of buying and selling assets to bring your portfolio back into line with your desired allocation (your mix of stocks, bonds, and cash). Over time and as markets fluctuate, the mix of assets in your portfolio will change. For example, as stocks grow, they often become a larger percentage of your portfolio. Rebalancing is used to re-align your investments with your risk tolerance and financial goals. This practice also allows investors to “buy low and sell high”, sometimes simultaneously. During times of market volatility, rebalancing offers investors the opportunity to buy investments at lower and more favorable prices.

Market Rallies

During periods of volatile markets, it is possible that periods of volatility could be followed by periods of calm (relief) or even upturns or rallies in the markets. This has already been the case in 2025, where market declines in the earlier months of the year (March and early-April) were followed by a market rally in late-April and May. Investors should take note that the contrarian approach of buying during market declines can prove to bear good fruit. These market rallies can offer an opportunity for investors to review their portfolios and consider rebalancing their investments.

Having a Plan

It is important to have a financial plan that clearly identifies your investment goals, time horizon, and tolerance for risk. Proper financial planning answers questions such as, “Am I on track for saving for retirement?” or “How much money do I need to have for my retirement?”. A good financial plan will also help you to stay diversified and allow your portfolio to evolve properly over time. Additionally, it will help you to stay invested for the long term and can aid towards avoiding costly investment mistakes.

Long-Term Perspective

It is understandable that short-term losses can cause anxiety, but letting emotions drive your investment plans can prove to be costly. Timing the markets is very difficult because it requires getting out at the right time and getting back in at the right time. Study after study has shown that the longer you invest, the lower the risk of losing money. Focusing on long-term investment goals instead of short-term gains or losses can help investors to avoid the risk of panic selling during downturns.

The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market.
Past performance is not a guarantee of future results. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Dollar-cost averaging cannot guarantee a profit or protect against a loss, and you should consider your financial ability to continue purchases through periods of low-price levels.
Every investor’s situation is unique, and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Francis Flores and not necessarily those of Raymond James.
Prosperity Wealth Management of Raymond James, 352-642-8330, 4880 W Newberry Rd. Suite 100, Gainesville, FL 32607
Raymond James & Associates, Inc., member New York Stock Exchange/SIPC

Francis Flores, CFP® is a Financial Advisor with Raymond James & Associates, Inc. and resides with his family in Gainesville, Florida. Francis graduated from the University of Florida with his BSBA and MBA degrees. He is a valued member of the UF Advisor Network.

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The UF Foundation (federal tax ID number 59-0974739) is a Florida nonprofit organization exempted from federal income tax as a 50l(c)(3) publicly supported charity. The UF Foundation does not provide legal, tax or financial advice. When considering planning matters, seek the advice of your own legal, tax or financial professionals.