U.S. stocks saw wild market swings on Monday as the tariff sell-off continued.

For some investors, it may be tempting to head for the exits rather than ride those ups and downs.

Yet investors who sell risk missing out on the upside.

“When there’s a bad sell-off, that bad sell-off is typically followed by a strong bounce back,” said Jack Manley, global market strategist at JPMorgan Asset Management.

“Given the nature of this sell-off, that likelihood for that bounce back, whenever it occurs, to be pretty concentrated and pretty powerful is that much higher,” Manley said.

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The market’s best days tend to closely follow the worst days, according to JPMorgan Asset Management’s research.

In all, seven of the market’s 10 best days occurred within two weeks of the 10 worst days, according to JPMorgan’s data spanning the past 20 years. For example, in 2020, markets saw their second-worst day of the year on March 12 at the onset of the Covid pandemic. The next day, the markets saw their second-best day of the year.

Yet while investors who stay the course stand to reap the biggest rewards, we’re wired to do the opposite, according to behavioral finance.

Big market drops can put investors in fight or flight mode, and selling out of the market can feel like running toward safety.

It helps for investors to adjust their perspective, according to Manley.

It wasn’t long ago that the S&P 500 was climbing to new all-time highs, reaching a new 5,000 milestone in February 2024, and then climbing to 6,000 for the first time in November 2024.

At some point, the index will again reach new all-time records.

However, investors tend to expect tomorrow to be worse than today, Manley said.

It would help for them to adjust their perspective, he said.  

In 150 years of stock market history, there have been wars, natural disasters, acts of terror, financial crises, a global pandemic and more. Yet the market has always eventually recovered and climbed to new all-time highs.

“If that becomes what you’re looking at, kind of the light at the end of the tunnel, then it becomes a lot easier to stomach the day in, day out volatility,” Manley said.

When markets hit bottom at the onset of the Covid pandemic, Barry Glassman, a certified financial planner and the founder and president of Glassman Wealth Services, said he asked clients who wanted to cash out one question: “Two years from now, do you think the market is going to be higher than it is today?”

Universally, most said yes. Based on that answer, Glassman advised the clients to do nothing.

Today, the markets have not fallen as far as that Covid market drop. But the question on the two-year outlook — and the resulting response to generally stay put — is still relevant now, said Glassman, who is also a member of the CNBC FA Council.

It’s also important to consider the purpose for the money, he said. If a client in their 50s has money in retirement accounts, those are long-term dollars that over the next 10 to 15 years will likely outperform in stocks compared to other investment choices, he said.

For investors who want to reduce risk, it can make sense, he said. But that doesn’t mean cashing out completely.

“You don’t need to go to 0% stocks,” Glassman said. “That’s just not prudent.”

Once investment losses exceed profits, you can use the excess to reduce regular income by up to $3,000 per year. After that, you can carry additional losses forward into future years to offset capital gains or income.

“It’s looking for a silver lining on a pouring, rainy, cloudy day,” said Lovison, who is also a certified public accountant.

You can also use tax-loss harvesting to rebalance your portfolio, he added.

You may consider so-called Roth individual retirement account conversions amid the stock market dip, according to certified financial planner Judy Brown at SC&H Group in the Washington, D.C., and Baltimore area.

Roth conversions transfer pretax or nondeductible IRA funds to a Roth IRA, which can start tax-free growth. The trade-off is that you’ll owe regular income taxes on the converted balance.  

After transferring funds to a Roth account, it’s possible to capture tax-free growth when the stock market eventually rebounds and the assets recover, she explained.

“But it has to be done fast,” said Brown, who is also a certified public accountant.

Of course, you need to project how the additional income could impact your taxes for the year, experts say.

If you’re eager to build tax-free retirement savings, you can still make Roth IRA contributions for 2024 until the federal tax deadline on April 15. Investing now could also be a chance to “buy the dip” while asset prices are lower, experts say.  

For 2024, you can contribute up to $7,000 if you’re under 50, or $8,000 if you’re 50 or older, assuming you have at least that much “earned income” from a job or self-employment. You also must meet the income requirements.  

“That’s definitely an opportunity that could be missed,” said Lovison. “It’s one more task in the middle of everything that’s going on.” 

Stock markets in the U.S. and around the globe have dropped since last week when President Donald Trump introduced tariffs on most imports. The sell-off is causing some Americans to rethink their financial investments, despite financial advisor recommendations to stay the course.

Money flowed in and out just 0.10% of 401(k) balances overall last week, according to data from Alight Solutions, which administers company 401(k) plans.

While small, the share is significant, Alight’s research director Rob Austin said in an email: “This is roughly four times average, because we typically see this level in a month.”

More than half, 53%, of the outflows in the week ending April 4 — $140 million — came from large-cap U.S. equities, he said. Nearly the same amount — 52%, or $138 million — went into stable value funds.

Alight data shows total 401(k) balances fell from $262 billion at the beginning of the week to $245 billion by the end of the day on Friday, a 7% decline on average.

About 70 million Americans participate in 401(k) plans, according to the Investment Company Institute.

The average 401(k) balance was $131,700 at the end of 2024 at Fidelity Investments, one of the nation’s largest retirement plan providers. A 7% decline in that account balance would amount to $9,219 in paper losses in just one week. 

To weather a retirement savings squeeze, financial advisors say it’s best to stick to a strategy that reflects your ability to take risks both financially and emotionally. Here are three strategies that can help.

An investment policy statement provides a framework for managing your portfolio, and helps you avoid making impulse decisions based on the news.

“I strongly believe in sticking to an investment policy statement that reflects my needs, and I tune out the rest of the noise,” said Carolyn McClanahan, a certified financial planner, physician and founder of Life Planning Partners in Jacksonville, Florida. “We are helping our clients do the same.”

Having a strategy can help you feel confident that when you do make changes, they suit your investment goals.

“It is perfectly fine to make some changes if needed. It also means having a discussion about the potential reduced upside [of doing so],” said CFP Lee Baker, the founder of Claris Financial Advisors in Atlanta.

Financial advisors say sticking your head in the sand can be a mistake.

“There are likely to be some tremendous buying opportunities in the wreckage,” Baker said, “but it requires both diligence and patience.”

McClanahan and Baker are both members of the CNBC Financial Advisor Council.

Money market funds can be helpful in retirement and investment portfolios if you plan to retire in the next five years or are already retired, financial advisors and investment strategists say.  

These so-called “cash equivalents” are highly liquid investments, and unlike money market accounts at banks and credit unions, these funds can be held in 401(k) plans and other qualified retirement plans. Top money market funds currently yield 4% or more, according to Bankrate.

“We’re going to need to wait and see how this plays out before we can start to make those adjustments,” Jerome Powell, Chairman of the Federal Reserve, said on Friday during remarks at the Society for the Advancement of Business Editing and Writing conference in Arlington, Virginia.

To help cope with the uncertainty, financial advisors recommend focusing on the fundamentals.

“If a trade war will reduce economic growth, what asset classes should you overweight in that environment? That’s different than changing your allocation because of a policy decision,” said CFP Ivory Johnson, founder of Delancey Wealth Management in Washington, D.C. Johnson is also a member of the CNBC FA Council. “Pay more attention to the data than the narrative.”

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