Share Market Volatility: How to Stay Focused in Uncertain Times
Anticipating Share Market Movements in a Volatile Economy
Managing market volatility in today’s economic climate, has investors increasingly concerned as the volatility persists in global investment markets. With inflation, geopolitical tensions, and shifting central bank policies all playing a role, price fluctuations in the share market are once again making headlines. Volatility is evident in all investment asset classes. While volatility may feel uncomfortable, it’s not new—and for long-term investors, it can actually present opportunities.
At Continuum Financial Planners, we encourage our clients to stay focused on their long-term strategy and avoid reacting to short-term market noise. Here’s what you need to know about share market volatility and how to navigate it with confidence.
What is Share Market Volatility?
Share market volatility refers to the rate and magnitude at which share prices change—sometimes dramatically—over a short period. These fluctuations are influenced by many factors, including:
- Company earnings announcements
- Interest rate changes
- Inflation data
- Geopolitical events
- Investor sentiment.
While market movements are reported daily in the media, it’s important to remember that these shifts are a normal part of investing. The day-to-day headlines may focus on how many billions were “wiped off” or “added to” the market, but these short-term changes rarely affect investors who stay the course with a long-term strategy.
What Drives Market Volatility?
Market participants include individual investors, institutional traders, technical analysts, algorithmic traders, and speculators. Each reacts differently based on their goals and interpretations of data. Some use a “top-down” approach, analysing macroeconomic trends, while others take a “bottom-up” approach, focusing on individual companies.
While these actors buy and sell for different reasons, markets overall reflect this dynamic activity. Volatility often increases when:
- Interest rates are expected to rise or fall
- Economic forecasts are revised
- Unexpected global events (e.g. conflict, pandemics) occur
- Investor confidence wanes.
These reactions, whether driven by fact or emotion, contribute to short-term price swings. They don’t change the fundamentals of strong companies.
Lessons from the Past: Market Resilience After Crises
The Global Financial Crisis (GFC) in 2008–2009 offered a powerful lesson: markets can fall fast, but they can also recover strongly. Following the GFC low in March 2009:
- The Australian All Ordinaries index rose more than 50% over the following 12 months.
- The US Dow Jones Industrial Average surged nearly 70% in local currency terms.
This rebound was not purely a reflection of rapid economic recovery—it was also fuelled by central bank stimulus, fiscal support, and significantly, a recognition that markets had overreacted during the downturn. Those who remained invested—and didn’t sell during the panic—were well-positioned to, and benefited from, the rebound.
Why Long-Term Investors Shouldn’t Fear Volatility
For those investing over a multi-year or multi-decade horizon, daily fluctuations are largely irrelevant. Volatility becomes a concern only if you’re forced to sell in a down market.
A long-term investor can visualise their portfolio not as a jagged line full of ups and downs, but as a steady line from one goalpost to another—such as from the initial investment date to retirement. By tuning out the noise and sticking with a well-diversified, strategically built portfolio, you can ride out volatility and benefit from the market’s long-term upward trend.
How to Respond to Market Volatility
If recent headlines have left you uneasy, here are some key principles to keep in mind:
- Stay the course
Emotional decisions often lead to poor investment outcomes. Focus on your long-term objectives rather than reacting to short-term noise. - Review your strategy, not the news
Your investment plan should be designed around your goals, time horizon, and risk tolerance—not daily market movements. - Seek professional advice
An experienced financial adviser can help you assess whether your portfolio remains suitable and make adjustments if needed. - Maintain diversification
A well-diversified portfolio reduces the impact of individual asset class volatility and helps balance risk across different sectors and markets.
Looking Ahead: What to Expect in 2025–2026
As we move through 2025, market volatility is likely to persist. Factors such as ongoing inflation concerns, central bank policy shifts, and geopolitical risks may create short-term market turbulence. Our view, drawn from our usual research resources suggest that many of these influences will persist into 2026. However, history shows us that disciplined investors who stay focused on their strategy can achieve positive outcomes—even in uncertain times.
Economic fundamentals like corporate earnings, cash flows, and balance sheet strength continue to play a critical role in long-term investment success. We reiterate that time in the market remains more productive than trying to time the market.
Need Help Managing Volatile Markets?
Is your current investment strategy right for your circumstances? Our experienced advice team is here to help. Continuum Financial Planners provide tailored, professional advice to help you stay on track—regardless of market conditions. To make an appointment with one of our team members –
- phone our office on 07-34213456, or
- at your convenience, use the linked Book A Meeting facility.
(This article was originally posted by us in July 2025.)
