By Tom Worthington
This article is published on: 5th May 2025
How It’s Impacting Investors and What’s Driving It
In today’s economic rollercoaster, market volatility has become a feature, not a bug. Thanks to inflation, interest rates, and politicians who change their stance more often than they change their ties, investors are left riding waves of uncertainty
Market volatility refers to how wildly asset prices swing around. It’s measured with stats like standard deviation or the VIX—aka the “fear index.” When VIX is high, it means traders are about as calm as a cat in a bathtub.
Think of volatility like a political debate: a lot of shouting, some overreactions, and nobody quite sure what the outcome will be—but everyone’s got an opinion.
When markets get shaky, investors run for the hills—or more precisely, into gold, bonds, or the financial equivalent of curling up under a blanket and binge-watching Netflix: cash. It’s not that they don’t want to invest; it’s just hard to focus on stocks when the economy’s behaving like a budget committee after three espressos.
High volatility often leads to panic selling and FOMO buying—essentially the investment version of speed-dating your portfolio. One bad news headline and people dump their assets faster than a politician deletes tweets after a scandal.
With public markets swinging like a metronome at a concert, investors are looking elsewhere: real estate, private equity, and alternatives that don’t fluctuate every time a central banker clears their throat.
Alternative strategies are basically the Switzerland of investing—neutral, quiet, and generally unaffected by the chaos going on next door.
When markets are turbulent, people freeze. Buying a house. Starting a business. Investing in that avocado farm you saw on Instagram?! Better wait until the economy isn’t throwing daily tantrums like it’s on a sugar high.
Geopolitical Tensions
Let’s face it—if the markets had a relationship status, it would be “It’s complicated.” Global tensions (Ukraine, Middle East, China-US trade) have created an environment where investors are just one diplomatic gaffe away from selling everything and moving to the woods.
And with international summits resembling more of a group therapy session than a solutions meeting, it’s no wonder markets are twitchy.
Inflation and Central Bank Policy
Central banks are trying to tame inflation with interest rate hikes—kind of like trying to put out a grease fire by hitting it with a calculator. Every time Jerome Powell or Christine Lagarde so much as raise an eyebrow, markets react like they just heard tax hikes are back on the menu.
Recession Fears
Recessions, Soft landings, Hard landings… No landing? At this point, the economy is basically being piloted by someone reading the instruction manual upside down. With mixed signals and conflicting forecasts, markets are responding like passengers on a turbulent flight—fastening their seatbelts and ordering strong drinks.
Tech and Social Media Hype
Social media has turned investing into part-time entertainment. Between Reddit-fueled pump-and-dumps and influencers recommending crypto in between smoothie recipes, market swings have become more meme than metric. Add algorithmic trading and you’ve got a digital casino with fewer rules and more drama than the House of Commons.
Earnings Uncertainty
Earnings season now feels like a bad date—lots of build-up, dramatic reveals, and someone always ends up disappointed. With rising costs and unpredictable demand, analysts are doing more guesswork than polling firms during a leadership race.
Here’s what smart investors are doing—besides stress-eating during market dips:
Volatility might be nerve-wracking, but it’s not the enemy. It’s a changing a nappy—messy, emotional, and always changing—but ultimately navigable if you stay calm, stay smart, and remember that every cycle, no matter how wild, eventually turns.
So hold onto your investments, keep a sense of humour, and remember: if in doubt talk to your adviser.
