Volatility Is the New Normal – and Always Has Been

Why waiting for “calm markets” could mean missing the journey entirely.

I had a client say something to me recently that I haven’t been able to stop thinking about.

We were in the middle of a review meeting. Markets had been choppy, headlines were gloomy, and investor sentiment was shaky. Rather than discussing any changes, they simply said:

“I’ll invest when things calm down.”

I nodded politely and moved on. But afterwards, I kept thinking about it.

When exactly have markets ever been calm?

Looking back across my career – and modern financial history more broadly – I genuinely struggled to identify a period that would qualify as truly stable. There has always been something: a crash, a war, a banking crisis, a pandemic, inflation fears, political uncertainty, or sudden market panic.

And that’s the point.

Volatility Isn’t the Exception – It’s the Journey

One of the biggest misconceptions in investing is the idea that volatility is abnormal.

It isn’t.

Volatility is the price investors pay for long-term returns. It is the terrain you must travel across to reach your financial goals.

Most people experience market falls as a signal that something has gone wrong. But what if we viewed them differently?

Imagine walking across a mountain range. The uphill sections aren’t evidence you’re heading the wrong way – they are simply part of the route between where you are and where you want to go.

Markets behave in exactly the same way.

History Shows Markets Recover – Even From the Worst Moments

Every major downturn in modern history has felt catastrophic at the time.

The Dot-Com Crash (2000–2002)

The Nasdaq-100 fell more than 82% after the technology bubble burst. Investors believed the future of growth investing had collapsed entirely.

It hadn’t.

September 11 Attacks (2001)

After the 9/11 terrorist attacks, US markets closed for four days. When they reopened, the Dow Jones fell roughly 14% in a single week.

Markets recovered.

The Global Financial Crisis (2008)

When Lehman Brothers collapsed in 2008, many feared the global financial system itself was about to fail.

Stock markets plunged. Confidence evaporated.

Yet five years later, a £10,000 equivalent investment in the S&P 500 during the depths of the crisis would have grown to roughly £26,400.

COVID-19 Market Crash (2020)

Between February and March 2020, the S&P 500 fell 34% in just over four weeks – one of the fastest crashes in history.

The Dow Jones lost 37%.

And yet what followed was the fastest recovery in over 150 years of stock market history. By August 2020, US markets had already returned to previous highs.

Inflation, War & The 2022 Sell-Off

The Russia-Ukraine war, rising inflation, and aggressive interest rate increases triggered another sharp downturn.

Again, markets eventually recovered.

The 2025 Tariff Shock

Most recently, the so-called “Liberation Day” tariff announcements in April 2025 caused the largest global market decline since the pandemic.

Within weeks, markets rebounded following tariff pauses and policy reversals. By June 2025, the S&P 500 had reached new all-time highs once again.

The Calm Investors Wait For Doesn’t Really Exist

There was a crisis in:

• 2001
• 2008
• 2020
• 2022
• 2025

And there will almost certainly be another one next year, or the year after that.

The “perfect moment” many investors wait for rarely arrives.

Why?

Because markets are constantly responding to new information. Every day, millions of investors react to:

• Economic data
• Interest rate changes
• Political events
• Wars and geopolitical tensions
• Corporate earnings
• Inflation concerns
• Investor sentiment

In today’s world of 24-hour news and algorithmic trading, those reactions happen faster and more dramatically than ever before.

This isn’t a flaw in the system.

It is the system.

Volatility Is Not the Same as Permanent Loss

It’s important to separate volatility from actual long-term loss.

A falling portfolio value on paper is not necessarily a permanent loss unless investments are sold during the downturn.

Every major crisis in history has felt permanent while it was happening. Yet over longer timeframes, markets have repeatedly demonstrated resilience.

That doesn’t mean markets rise in a straight line.

They never have.

But history suggests patient investors who remain invested are generally rewarded over time.

The Biggest Risk May Be Sitting on the Sidelines

Many investors believe avoiding market downturns is the key to success.

In reality, missing recoveries can be even more damaging.

Those who sold during the COVID crash in March 2020 missed one of the strongest rallies in modern history.

Those who exited markets during the 2025 tariff panic missed a near-complete recovery within weeks.

The problem with trying to “wait for calm” is that markets often recover before confidence returns.

By the time investors feel comfortable again, much of the rebound has already happened.

A Good Financial Plan Is Built for Volatility

The goal of financial planning isn’t to eliminate volatility.

That’s impossible.

The goal is to build a portfolio and financial structure capable of surviving it.

That means:

• Keeping short-term cash needs outside of market investments
• Maintaining an emergency fund or financial buffer
• Investing according to your true risk tolerance
• Creating a long-term strategy designed to withstand uncertainty

Because ultimately, successful investing is often less about predicting markets and more about remaining invested through uncomfortable periods.

Final Thoughts

My client is still waiting for things to calm down.

I hope, in time, they come to realise that calm is not a prerequisite for investing. It’s largely a mirage.

The world never stops changing. Markets never stop reacting.

And the investors most likely to succeed over the long term are not those waiting for perfect conditions – but those who accept volatility as part of the journey.

Because volatility isn’t the new normal.

It has always been the normal.

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Frequently Asked Questions About Market Volatility

What does market volatility mean?

Market volatility refers to the degree to which investment prices rise and fall over time. Higher volatility means larger price movements, both up and down.

Is volatility bad for investors?

Not necessarily. Volatility is uncomfortable, but it is also a normal part of long-term investing. Historically, markets have recovered from downturns over time.

Should I stop investing during a market crash?

Making emotional investment decisions during downturns can be damaging. Long-term investors often benefit from remaining invested rather than trying to time the market.

Why do markets recover after crashes?

Markets are forward-looking. Over time, businesses adapt, economies recover, and investor confidence returns, helping markets regain value.

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Disclaimer

This article is for informational purposes only and does not constitute personalised financial advice. Investments can fall as well as rise in value, and you may get back less than you invest. Past performance is not a reliable indicator of future results. 8 Financial Planning is authorised and regulated by the Financial Conduct Authority.