Market Uncertainty and the Cost of Waiting to Invest

TL;DR

When markets feel uncertain, many investors decide to wait until things settle before they invest or stay invested. Markets almost never send a clear signal that the uncertainty is over, and they often begin to recover while the news is still bad. Stepping aside means you have to be right twice: once about when to get out, and again about when to get back in. A portfolio built around what the money is for, when you will need it, and how much risk you can actually carry does not depend on getting either of those calls right.

There is a very natural instinct in investing: when things feel uncertain, wait. Let the dust settle, see what happens, and then make a decision. It feels like the responsible thing to do.

The trouble is that markets rarely tell anyone when the dust has settled. By the time the economy looks stronger, a geopolitical worry has faded, or the headlines simply feel less alarming, prices may already have moved.

Why waiting to invest feels safer than it is

Waiting feels like not deciding. In practice, it is a decision. If you are sitting in cash until things look clearer, you have chosen to own cash for an unknown period of time, and cash has risks of its own. Over time, inflation can quietly reduce what that money will buy. And if markets recover while you are waiting, you may end up buying back in at higher prices than the ones you sold at.

None of this means investors should ignore risk. Risk is real, and some periods really are more dangerous than others. The point is that waiting for certainty does not remove risk. It swaps one set of risks, the ones you can see in the headlines, for another set that is harder to notice because nothing dramatic happens. You just end up somewhere other than where you meant to be.

Uncertainty is not an interruption to investing. It is a permanent part of it. That is why a sound investment process should not depend on correctly predicting what happens next.

What 150 years of stock market returns show about uncertainty

The chart below shows annual returns for the S&P 500, an index that tracks roughly 500 of the largest publicly traded companies in the United States, going back more than 150 years.

Graphic: Visual Capitalist, “152 Years of S&P 500 Returns” (data via TradingView, as shown in the original graphic). Historical returns are shown for context only. Any 2026 forecast commentary in the graphic reflects the views of the analysts cited there, not a forecast by Talisman Wealth Advisors.

What makes this chart worth looking at is not where 2026 ends up. It is the larger pattern. Over more than a century and a half, annual returns have ranged from severe losses to very strong gains. Those years included wars, recessions, financial panics, pandemics, elections, and long stretches when nothing much seemed to be happening at all. In most of those years, the outcome was not obvious at the start.

Investors have never been handed a reliable all-clear before markets moved. The people living through each of those years were dealing with their own version of the uncertainty we feel today, and it felt just as real to them.

The harder question: when do you get back in?

A market decline can feel severe while it is happening. It dominates the financial news, it shows up on every account statement, and stepping aside until conditions improve starts to look sensible.

But selling is only half of that decision. The other half is deciding when to buy back in, and that turns out to be the harder part. Markets tend to look ahead. Prices reflect what investors expect to happen next, not only what is happening today. So a recovery can start while the economic news is still discouraging and most people are still nervous.

That creates a real problem for anyone waiting on the sidelines. The moment it finally feels comfortable to reinvest usually arrives after prices have already climbed, sometimes well after. To come out ahead by stepping aside, you would need to sell before the worst of a decline and buy back before the recovery is underway. Getting one of those right is hard. Getting both right, consistently, is something very few investors manage.

Good reasons to change your investment strategy

This does not mean a portfolio should never change. There are good reasons to adjust it, and they come up regularly.

Portfolios need to be rebalanced, which means bringing the mix of stocks, bonds, and cash back to the proportions you originally chose after market movements have pushed it off course. Your need for cash may change because of a home purchase, a tuition bill, or a business decision. Retirement gets closer, and money you will start spending in a few years usually should be invested differently than money you will not touch for twenty. Goals and family circumstances change too.

Those are reasons to change an investment strategy because the plan itself has changed. That is different from changing it simply because the market feels uncertain.

A useful question to ask yourself is: what has actually changed in my life or my goals? If the honest answer is that nothing has changed and the news just feels worse, that is usually a reason to review the plan, not to abandon it.

How to build a portfolio that does not need certainty

A well-constructed plan assumes there will be stretches when markets feel uncomfortable. Instead of trying to predict those periods, it is built around four things that do not depend on a forecast.

The first is the purpose of the money. Money set aside for a house down payment next year has a very different job than money meant to support you in your eighties. The second is the time horizon, meaning how long until the money will actually be spent. Money you will not need for many years has time to recover from bad stretches. Money you need soon does not, so it generally belongs in steadier investments. The third is appropriate risk: enough to reach your goals, and not so much that a bad year forces you into decisions you would regret. The fourth is liquidity, which simply means having enough cash or easily accessible money that you are never forced to sell investments at a bad time to cover a bill.

Think about planning an outdoor event months in advance. You cannot know what the weather will be on the day, so you do not try to guess it. You rent the tent. The event goes on either way. A portfolio built around purpose, timing, risk, and liquidity works the same way: it is set up so that a bad year is uncomfortable but not a reason to change course.

For our clients, this is why we build portfolios around real financial goals rather than short-term forecasts.

People Also Ask

Should I wait for the market to settle before investing?

Markets rarely signal clearly that uncertainty has passed, and recoveries often begin while the news is still bad. Waiting can mean buying back in at higher prices. A better approach is to decide how much to invest based on when you will need the money and how much risk you can carry, rather than on how the market feels this month.

Is it safer to keep my money in cash when the market is uncertain?

Cash protects against short-term market drops, which is why some of your money should be in cash for near-term needs. Holding long-term money in cash has its own risks, though. Inflation can erode its buying power over time, and you may miss a recovery while waiting for a clearer signal to reinvest.

When does it make sense to change my investment strategy?

It usually makes sense when something in your life or goals has changed: retirement is getting closer, you need cash for a major purchase, your income has shifted, or your portfolio has drifted from its intended mix and needs rebalancing. Changing course only because headlines feel worrying is a different decision and often a costly one.

Can anyone predict what the stock market will do this year?

No one can reliably predict a single year’s market return. Over more than 150 years of S&P 500 history, annual results have ranged from deep losses to strong gains, often in ways that surprised forecasters. That is why it helps to build a plan that can handle a range of outcomes instead of depending on one forecast.

The goal is a plan that works without certainty

Nobody can remove uncertainty from investing, and a plan that only works if the next year goes smoothly is not much of a plan. The goal is a portfolio that is built for the purpose of your money, matched to when you will need it, and able to get through a difficult stretch without forcing your hand.

If uncertainty has you thinking about stepping aside, that is a good moment to check whether your plan was built for times like this, rather than to guess what the market does next.

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