By: Stephan Bernard, an analyst at Allan Gray

Ongoing tariff disputes following President Trump’s “Liberation Day” announcement and local political uncertainty may tempt investors to shift to lower-risk assets or disinvest. But before making a panicked move, pause and reflect on lessons from past periods of uncertainty, says Stephan Bernard, an analyst at Allan Gray.

“When COVID-19 disrupted global markets, investors questioned the value of past downturns, given the novel nature of the crisis. Market declines were comparable to the Great Depression. Asset classes fell in unison, providing few safe havens. Fearing economic collapse, many wanted to exit equities – but those who stayed the course were ultimately rewarded as markets stabilised,” says Bernard.

Against this, below he shares key lessons to help investors navigate today’s market turmoil.

Lesson 1: Avoid making fear-driven decisions

“While severe downturns naturally evoke fears of permanent damage, history shows that markets eventually rebound, often robustly. This doesn’t imply that disruption requires no response, but rather that investors should avoid making fear-driven decisions,” says Bernard.

Lesson 2: Remain invested during periods of uncertainty

“As hard as it may feel, remaining invested through periods of volatility and uncertainty, and not giving in to the temptation to follow perceived safety, ensures participation in recoveries, which are important drivers of long-term returns,” says Bernard.

Graph 1 shows the total return index of South African equities, highlighting market drawdowns since the dot-com bubble of the late 1990s. During every crisis, the prevailing pessimism following significant market declines makes attractive prospective returns feel highly unlikely. And yet, over time, the market rises to surpass the previous high-water mark (the red areas).

He says that the sell-off in April 2025, as reflected by the 11% drawdown in the South African equity market, was not severe, considering the high base established by the strong performance of local equities throughout 2024 and the first quarter of 2025. The drawdown was also not exceptionally large relative to history, as shown in Graph 2, and a reasonably swift recovery occurred.

“Yet, uncertainty persists, with  policy shifts threatening market disruption, slow growth, and high inflation. The road ahead may still be bumpy.”

Lesson 3: Protect your capital by not overestimating probability of losses

“Overestimating the probability or the extent of losses during market turbulence can lead you astray,” says Bernard. “To obtain a realistic view, put current events, and your associated discomfort, into perspective by looking at how your investments have responded to similar events.”

He says that a good approach during such periods is to avoid permanent capital loss through disciplined, valuation-based investing.

“Research shows that over time, the benefit of limiting losses in weaker markets (down months) often compounds meaningfully.”

Lesson 4: Focus on assets with a strong margin of safety

Bernard says periods of heightened uncertainty reinforce the importance of investing in assets priced below their intrinsic value. A strong margin of safety – the gap between what an asset is worth and what you're paying – offers a buffer against market volatility.

“This approach, paired with a deep aversion to permanent capital loss, acts as a risk management tool and remains a principle for long-term investors. If you have found an investment manager with a track record to make your asset allocation decisions, you can sleep a little easier during periods of volatility.”

Lesson 5: Respond to uncertainty only if your personal circumstances change

He says before making changes to your portfolio, consider whether your personal circumstances, investment goals, or time horizon have shifted. If they haven’t, staying the course may be the wiser choice.

“History shows that long-term value is often built by investing through uncertainty—not by reacting to it. Staying focused on your long-term strategy is key,” concludes Bernard.