It’s early morning, your heart is pounding, and you are preparing for your first Two Oceans Marathon. Emotions may be all over the place, you may even be a bit sleep deprived, after a night of wondering whether you’ve prepared adequately. You’ve maintained a healthy diet, kept fit and done all you could to prepare your body for the challenge that awaits.
Preparation sets the tone for the race
Given that it’s your first time taking part in a race of such magnitude, naturally you’d want to cover your bases, considering the numerous strategies you could draw upon to plan the race. With one goal in mind – to finish the marathon within your targeted time – there are naturally many unknowns that lie ahead. The keyword here, however, is preparation. Although you don’t know the condition you’ll be in when crossing the finish line, you’ve prepared yourself for the obstacles that might present themselves, trusting that you have trained enough to achieve what you set out to do.
Having the end goal in mind
You can draw many parallels between these concepts of preparation and uncertainty and your investment journey, where the market can often be just as, if not more, unpredictable and unsettling than your first marathon. It’s certainly a challenge to time the outcome of the market, given how unpredictable it is on a short-term basis. Unforeseen macroeconomic events such as geopolitical tensions can lead to rising oil prices, sanctions, and trade wars. At present, for example, concerns around higher tariffs globally and the impact that they could have on trade balances, risks of returning inflation, rising interest rates, and growth expectations continually being downgraded – just to mention a few – mean that the impact on the stock market has been immensely unsettling for investors. These concerns may even be pressurising policymakers to mitigate their negative effects.
It’s fair to say that the first quarter of 2025 has presented significant uncertainty for market participants, and it seems that a confluence of geopolitical events has raised fears about the resilience of the global economy and prospects for investment valuations. Recently, news flow on global events has been overwhelming, particularly with South Africa seemingly in the crosshairs of the US, and the aggressive foreign policy of the Trump administration. Given the possibility of South Africa losing its African Growth and Opportunity Act (AGOA) trading benefits, and perhaps sanctions being imposed on specific politicians, it’s hard not to be concerned about the future value of your investments. History suggests, however, that during a politically transitionary period such as this, it is important to distinguish the noise from the news flow which has a bearing on economic policy and earnings expectations.
It’s important to be disciplined
As hard as this can be, we need to keep in mind that preparation drives investment success. It can be challenging to maintain discipline when experiencing an emotional rollercoaster, but it is much like running a marathon: if you are able to adapt your mindset to embrace uncertainty, then you may be better placed to endure market downturns.
The preparation we want to highlight could include the following:
- Specify your investment goals and constraints, risk appetite and investment horizon.
- Research and select the appropriate asset managers, with the guidance of a discretionary fund manager, since they possess the expertise to cater for your investment goals.
- After conducting sufficient due diligence, build a robust solutions range, improving the probability of meeting client needs through unpredictable market environments.
- Maintain a relationship with your portfolio manager, and ensure you are provided with the tools you need to understand how market forces impact your portfolio.
- With these foundations in place, it becomes far easier to ride out times of excessive volatility. This ensures you can remain invested and endure market cycles with the end goal in mind.
Volatility in a visual
The chart below shows the historical performance of the S&P 500 Index over a five-year period (from 2020 to the beginning of 2025). Although past performance is not an indicator of future performance, it’s clear to see how the index rebounded from the Covid pandemic (perhaps one of the most uncertain periods investors have experienced in history) and even managed to surpass the 6 000 mark over a four-year period. During that time, the index declined significantly to below the 4 000 mark, largely attributed to post-pandemic supply chain issues, high inflation and increasing interest rates, as the US Federal Reserve (US Fed) attempted to combat the supply-induced issues caused by the pandemic. However, the market rebounded after the drop, driven by optimism over easing supply chains and possible rate cuts from the Fed. Looking back, the S&P 500 Index has experienced a drawdown 92% of the time since 1950. This is the price of entry for equity investors, because without declines in stock prices, there would be no opportunity for greater returns.
Each year presents new challenges for any given market cycle, but investment experts need to be trusted for the reasons they were selected and given the time to navigate uncertainty. Asset managers and discretionary fund managers are equipped to build, manage and review client portfolios to help mitigate risk through both portfolio construction as well as asset allocation techniques. Portfolio managers analyse portfolios regularly and forecast possible market downturns to make necessary portfolio adjustments. With a keen eye on market trends and a deep understanding of financial products, portfolio managers (with the backing of a very robust investment process, and supported by constant investment committee engagement), make informed investment decisions to ensure that your portfolio is safeguarded.
A unique route
Glacier Invest portfolio managers know that preparation drives investment success and are ultimately tasked with developing investment strategies that cater for the unique needs of your clients. They are able to weather the constant unpredictability of the market, which increases the likelihood of meeting your client goals over time, and throughout various market cycles. It is important to embrace volatility and manage market uncertainty through engagement with your Glacier Invest business development manager and portfolio manager. In the current economic and political climate, continued volatility is all but certain. The key is to prepare ourselves, stripping out the emotion and reminding ourselves that a client’s investment journey is a marathon, rather than a sprint. When uncertainty in the market feels overwhelming, it pays to keep the following in mind:
“Successful investing is about managing risk, not avoiding it” – Benjamin Graham
Disclaimer
Glacier Financial Solutions (Pty) Ltd is a Licensed Discretionary Financial Services Provider, trading as Glacier Invest FSP 770.Sanlam Multi Manager International (Pty) Ltd FSP 845 is a Licensed Discretionary Financial Services Provider, acting as a Juristic Representative under Glacier Invest. As Juristic Representative of Glacier Invest, Sanlam Multi Manager International (Pty) Ltd manages the retail investment solutions offered by Glacier Invest.
