How Market Volatility Is Evolving – And Why Our Clients Are Staying the Course

Chris Broome – Chartered Financial Planner

In a world where market shocks feel increasingly frequent and intense, many clients understandably ask: Is our investment strategy still fit for purpose?

It’s a great question. At Longhurst, we welcome these conversations because they allow us to unpack what’s really happening in markets today – and to reaffirm why a thoughtful financial plan, grounded in a “cash plus diversified portfolio” approach, remains one of the most effective tools we have.

Let’s explore the shifting landscape:

1.  Increased Frequency and Scale of Market Shocks

Volatility isn’t new. But its intensity and frequency are. Metrics like the VIX index confirm it – market spikes are happening more often, driven by events like:

  • The 2008 global financial crisis
  • Brexit
  • The COVID-19 pandemic
  • The 2022 LDI pension crisis
  • Collapses of SVB and Credit Suisse

These are not isolated incidents – they’re systemic, global, and fast-moving. In such an environment, long-term diversification remains important, but may not insulate against short-term disruption.

2.  The Rise of Technological Disruption

Modern markets are driven heavily by technology. Today, up to 60% of trades are made by algorithms. When things go wrong – as in the 2010 “Flash Crash” – it happens in milliseconds.

Add to that a sharp rise in cyberattacks, with nearly half of UK businesses affected in 2024 alone, and you’ve got a digital layer of risk that traditional portfolios weren’t built for.

3.  Market Concentration: Big Tech’s Dominance

In 2023, just seven companies were responsible for more than half the return of the S&P 500. That level of market concentration means diversification may not be doing as much heavy lifting as it used to.

When large-cap tech stumbles, it can send ripples across entire portfolios – even those built to be balanced.

4.  Global Interconnectedness = Cross-Asset Volatility

Gone are the days when equity markets alone dictated investor sentiment. Today, disruption in one corner of the market – like foreign exchange or commodities – can send shockwaves across all asset classes, thanks to our globally connected financial system.

The 2024 yen carry trade unwind is a prime example of a localised issue becoming a global problem overnight.

5.  Hidden Risks and Changing Dynamics

Events like the Archegos collapse in 2021 remind us that leverage and structural risk often remain hidden until it’s too late. These blind spots are difficult to diversify against – and highlight the need for ongoing due diligence and agile risk management.

So, Where Does This Leave Our Clients?

In a stronger position than you might think.

Rather than attempting to predict every shock or pivot with every market turn, we take a more measured approach:

  • Strategic Cash Reserves: We ensure short-term spending needs and emotional comfort are covered.
  • Diversified, Global Portfolios: Yes, markets are evolving – but diversification across asset classes, geographies, and sectors still provides a powerful buffer.
  • Active Rebalancing and Ongoing Advice: We’re not “set and forget” managers. We respond, review, and realign regularly.

In truth, the modern investing environment requires more than just spreadsheets and forecasts. It demands behavioural coaching, emotional intelligence, and a human-first approach to financial planning.

In Summary

The world is more volatile, more connected, and more complex than ever. But rather than retreating from markets, we believe in adapting with intention – and staying anchored to your life goals.

Because while we can’t control the next market shock, we can control how well-prepared we are to weather it.

Next steps

If you’d like to review your strategy or simply want to talk things through, we’re just a call away.

Contact us

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.