I realize the market is volatile these days but are there sectors I should increase or decrease exposure to with all the back and forth about tariffs? Because it doesn’t seem like this is a short-term thing.
— Investor
A. It sure is a volatile time for the stock market.
Should you change your portfolio in this volatile market? Unless you have a crystal ball, take a step back.
The benefits of diversification become evident during times of volatility, said Deva Panambur, a fee-only planner with Sarsi, LLC in West New York.
“This year, although the broad U.S. stock market has been beaten down and is down for the year, stocks of low-growth, stable companies and those of dividend-paying companies, both of which are relatively cheap, have fared better,” he said.
International stocks have underperformed U.S. stocks for many years now, but that has changed in the last few months, especially as the U.S. dollar has depreciated in relation to other currencies, he said. These stocks are up for the year.
As the risk of an economic slowdown and possibly a recession has increased, interest rates have fallen and as a result, bonds have rallied, Panambur said.
“You should not make dramatic changes to your portfolio just based on what has done well recently and ‘chase returns,’” he said. “Rather, create a resilient portfolio that has appropriate exposure to various sectors and types of stocks and bonds, in line with your objectives and risk profile. That is how you can improve the reliability of the portfolio.”
This article was originally published in March 2025