Downside Awareness: Managing Market Volatility
By Daniel Baumgartner & Petra Peters
Market volatility affects portfolios, but it also affects investors’ confidence. When markets swing, even disciplined investors can feel the urge to react, second-guess past decisions, or make changes just to regain a sense of control. Without a clear framework in place, those emotional decisions can quietly do more damage than the volatility itself. That’s why managing market volatility requires a pre-defined, decision-centric approach, not reactions driven by headlines.
In this article, we explore how you can manage market volatility through disciplined decision-making.
Risk Before Return
Many inexperienced investors see market volatility as something to react to when it rears its head. However, capital preservation is a foundational discipline built on proactivity, not reactivity. We incorporate risk management strategies when designing client portfolios instead of waiting for a destabilizing event.
For instance, we create diversified portfolios and rebalance them regularly. These seemingly simple actions play a critical role in shielding our clients’ assets from ongoing market volatility.
Context Over Prediction
Predictive analytics certainly have their place. However, when it comes to managing market volatility, we place greater value on context than on prediction.
Market cycles are to be expected. Some investors attempt to use their experience with them to try to “time” the market. However, this is a risky strategy, and no one can time the market with certainty. A sound long-term investment strategy almost always beats one involving constant market timing.
Instead of trying to predict what the market may do next, we implement proven risk-management strategies and help clients understand the nature of market cycles.
Decisions Over Performance
During times of market volatility, it’s especially critical to look closely at each client’s portfolio. Part of this is looking at investment performance, but that isn’t all that matters. We also examine the past decisions we’ve made.
While reviewing a portfolio, we may ask ourselves the following questions:
- Does every allocation still have explicit intent?
- Have current allocations drifted from their targets?
- If so, by how much?
- Has the portfolio become too concentrated in one sector or one asset class?
Time horizons also play a role in this process. If the time remaining to accomplish a particular goal is running out, a strategic shift may be necessary.
For example, it’s generally advisable to adjust your investment strategy as you approach retirement age. People earlier in their careers can often afford more high-risk, high-reward investments because their portfolios have time to rebound. However, as one gets closer to retirement, their focus typically shifts to capital preservation.
As a client nears retirement, they often want to rebalance their portfolio so there’s a greater focus on income-generating investments, investments that offer moderate returns, or both.
Panic-selling and other kinds of emotional reactivity have no place in any responsible investment strategy. When you know what questions to ask, you are much better equipped to insulate your wealth from market volatility.
Human Judgment
In recent years, there’s been a lot of buzz about technology and its role in investment management. Some people even think that technology is beginning to outcompete financial and investment advisors.
However, while technology can provide more complete portfolio visibility, human judgment plays a vital role in managing market volatility. By handling downside deliberately instead of reactively, we aim to help clients build reliable frameworks for wealth preservation.
Let Us Help You Manage Market Volatility With Confidence
We started Terra Nova Asset Management to help individuals and couples in the U.S. and Europe develop custom-tailored investment plans. Managing market volatility and other risks is a central part of what we do. If you need help structuring or restructuring your investment plan, we’re here for you.
As fiduciaries, we’re obligated to act in your best interests and yours alone. We strive to bring clarity to the investment process and support responsible wealth stewardship across generations.
Does it seem like we may be a good fit? Reach out to us directly at 212-355-1234 or ppeters@terranovausa.com for the New York office (Petra) or 855-248-6630 or baumgartner@terranovausa.com for the New Jersey office (Daniel). You may also contact us here to schedule a meeting and we’ll get in touch with you soon!
Frequently Asked Questions
What is market volatility and why does it matter to investors?
Market volatility refers to the frequency and magnitude of price movements in the financial markets. While volatility is a normal part of investing, unmanaged volatility can increase the risk of permanent losses, especially when decisions are driven by emotion rather than strategy. A disciplined, decision-centric framework helps investors stay focused on long-term goals instead of reacting to short-term market swings.
How should investors manage market volatility without panic selling?
Managing market volatility starts with having a predefined investment strategy that prioritizes risk management before returns. This includes diversification, regular rebalancing, and clear allocation intent tied to specific goals and time horizons. The Terra Nova Asset Management team helps clients evaluate whether their portfolios remain aligned with those objectives, reducing the temptation to time the market or make reactive decisions during periods of uncertainty.
Can a financial advisor help preserve wealth during market volatility?
Yes. A fiduciary financial advisor can provide structure, context, and accountability when markets become volatile. The advisors at Terra Nova Asset Management focus on disciplined decision-making, portfolio oversight, and downside awareness rather than short-term performance. This approach helps clients preserve capital, maintain confidence, and navigate market volatility with a long-term perspective.
About Daniel
Daniel Baumgartner is a founding partner of Terra Nova Asset Management LLC, a partner-owned investment advisory firm that manages individual portfolios for clients. Daniel has extensive experience in marketing, development of special U.S.-investment products, as well as customer acquisition and relationship management. His ultimate goal is to make a difference in his clients’ financial lives through honest investment advice. He strives to provide high-touch, personalized service and enjoys getting to know a client’s personality as it relates to their financial circumstances before crafting the right solutions. As money is a very personal subject, Daniel takes his responsibility as an advisor very seriously, forming long-term relationships with clients based on trust.
Daniel received his degree in finance and international business from New York University. Outside of the office, he is a hobby landscape, street photographer, and has a great interest in U.S. and European history (16th-19th centuries), believing it helps him answer the question “Why is something the way it is?”
About Petra
Petra Peters is a founding partner and the Chief Executive Officer of Terra Nova Asset Management LLC, a partner-owned investment advisory firm that manages individual portfolios for clients. Petra has decades of experience in the banking industry, asset management, overseeing the administration of individual accounts, and designing and advising specialized funds tailored to the requirements of international private and institutional clients. With extensive knowledge of both Europe and the U.S., she’s able to provide advice and services beyond the typical investment advisor. Petra desires for her clients to live a financially care-free life so they can pursue their passions, and she values their trust and gratitude. Creating invaluable friendships formed over years of partnership, some clients even consider her part of their family.
Petra’s interests outside of work include classical music, history, travel, charities, motorcycling, and golf. She is also on the board of a German charity.