3 strategic considerations for weathering a stock market storm

2026 is off to a record-breaking start for the FTSE 100.

Just a few days into the new year, the index passed the 10,000-mark for the first time inits 42-year history.

That said, the rest of the year might not be smooth sailing for investors. In fact, MoneyAge reports that 92% of UK financial advisers expect the markets will be more volatile in 2026 than in 2025.

As such, you might be wondering what – if anything – you should do to keep your investments growing if markets yo-yo. Read on to explore why volatility may be expected and three strategic considerations for weathering any upcoming storms.

Volatility is caused by a number of factors

There are numerous reasons investors might anticipate fluctuations in the stock markets this year. When asked what could drive volatility in 2026, the 300 financial advisers surveyed by MoneyAge pointed to the following uncertainties:

• The global economy (68%): This could include myriad trends and events. For example, in January 2026, the Guardian reported that US and UK markets dipped briefly as the US threatened to impose new tariffs on multiple European countries.
• UK inflation (61%): Data from the Office for National Statistics (ONS) shows that inflation rose to 3.4% in December 2025. While this is below 2025’s peak of 3.8%, some believe inflation will continue rising in 2026.
• Interest rates (50%): Interest rates have steadily fallen since July 2024, dropping from 5.25% to 3.75% in January 2026, according to Bank of England (BoE) data. If this trend continues, some investments could deliver reduced returns.
• Global conflicts (42%): Ongoing conflicts around the world, and the threat of new ones, could create more uncertainty – potentially impacting some regional indices and asset classes.
• Global technology equities (39%): Some believe investors may be overpaying for technology stocks, particularly for shares in AI companies. As a result, there is speculation that the “AI bubble” could soon burst, leading to a sudden fall in prices and having a knock-on effect on markets.

It’s important to remember that all of the above are based on speculative forecasts. The future is indeed uncertain, but within that uncertainty lies the potential for gains (as well as losses).

Here are three ways you can brace yourself for stock market volatility to help mitigate the impact on your investments.

• Remember that volatility is to be expected
• Invest for long-term gains, rather than quick wins
• Diversify your investment portfolio to mitigate the risk of volatility

Take a look at any stock market index, and you’ll no doubt notice one common characteristic:volatility.

Share prices rise and fall over time. It’s a matter of when and by how much that is a constant uncertainty.

As such, rather than panicking and exiting the market at the first sign of a downswing,it might be worth embracing volatility as an inevitability.

What’s more, volatility is often caused by investors’ reactions to uncertainty, rather than the sources of uncertainty themselves. When investors lose confidence and rush to exit the market, values fall. Usually, values rebound as uncertainty subsides and confidence recovers.

So, an effective course of action may be to do nothing. Shut out the media noise and remind yourself of your investment goals and strategy to help prevent a knee-jerk reaction. If you’re particularly worried or wish to decumulate a portion of your investment portfolio soon, speak with a financial adviser before taking potentially irreversible action.

Despite continuous ups and downs, the stock markets have historically trended upwards over time – as we saw at the start of the year, when the FTSE 100 hit a milestone record high.

Even after significant falls, the markets have generally picked back up to reach and exceed their previous levels. It took the FTSE 100 less than two years to recover from the Covid-19 pandemic, which saw the index drop by almost 2,000 points in 2020 – as shown by London Stock Exchange (LSE) data.

What’s more, record highs are unlikely to mean the markets have hit a “ceiling”. Indeed, they have continued to rise after every previous milestone high, having reached 9,000 just last year.

Rather than worrying about short-term dips and record highs, it’s often recommended to invest for the long term. By staying invested for several years, or even decades, you could improve your odds of achieving positive returns. By contrast, selling during a downswing is likely to lock in a loss.

Of course, the future remains unknown, and historical trends are not a reliable predictor of future performance. As such, it might be worth regularly reviewing your investment strategy and rebalancing your portfolio to align with your needs and preferences.

We all know the proverb “don’t put all your eggs in one basket”, and investing is no exception.

However, it’s not as straightforward as having “a few different investments”. With so many forces creating uncertainty in the markets, it’s often worth diversifying your portfolio across multiple different categories, such as:

• Asset classes (e.g. stocks, bonds, gilts, and cash)
• Geographies (e.g. UK, international, emerging markets)
• Sectors (e.g. technology, energy, and real estate)
• Risk profiles (with a range of high- and low-risk assets, depending on your appetite).

When you create your investment strategy, you may define what proportion of your investment portfolio you wish to attribute across these categories. Over the years, with professional guidance, you can reassess your portfolio and ensure it continues to align with your goals – no matter what markets are doing.

Get in touch

If you’re worried about potential volatility on the horizon, or are simply looking to create or update your investment strategy, our financial advisers can help you make informed decisions.

Call 02392 231448 today to find out what we can do for you.

Please note

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.