Stock market strategies for nervous investors

Blackjack winners employ a timeless set of strategies: Always assume the dealer’s down card is 10. Stand on hard 17, hit on a soft one (Ace + 6). Hit if you have a low hand, 12-16, and the dealer has a 7 or higher showing. There are rules on when to split and when to double down and so on. Sometimes you’ll lose, of course, even when you’re rigorous in your obedience to the formula. But the rules give you the best odds of winning. It’s math.

Similarly, the practice of investing in the stock market has its own set of tried-and-true practices. Your portfolio should reflect your age and circumstances — you’ll take more risks when you’re younger because you have time to recover in a dip, but as you get older your investment mix should be weighted in more conservative products.

You might go up and down, but historically, folks who have stayed in the market have done leagues better than those who pulled their chips and walked away. They followed the established rules, and one of the most common investing regrets is pulling out in reaction to a downturn, which, when compounded among thousands of shareholders, causes the markets to spiral even more.

But unlike blackjack, global markets are affected by all kinds of forces — climate change, politics and policies and pandemics are a few. And now that there’s a wild card in the White House in the form of Donald Trump, plus the infinite hot takes of what’s going to happen to the markets, investors might be nervous enough to pull out altogether. It’s certainly understandable, but not a solid strategy.

When words don’t count, and when they do

"Everybody's got plenty of risk tolerance when the market is going up, and as soon as it goes down, people realize, oh, they don't have such a risk tolerance, after all," said Bankrate’s chief financial analyst, Greg McBride, who advised folks to be realistic about their goals and capacity for uncertainty when setting up investment accounts to avoid making panic-driven decisions during a boom-bust cycle.

"Whether you're sitting down with a human money manager or you're using a managed system, you've got to truly assess what your risk tolerance is," McBride said. "Ask yourself what would you do if the market fell 10%? Would you go run and hide under your bed, or would you buy more?”

McBride maintains that if you have a solid strategy in place, you’ll be fine. Stay strapped in and you’ll coast to safety eventually.

Monica Guerra, head of U.S. policy at Morgan Stanley Wealth Management, takes a more nuanced approach and looks to the political climate for clues as to what will affect markets in the short, medium and long-term. Trump likes AI, for example. "So if you're a stock picker, that would be something you would look at. It's those types of dynamics that are going to become clear, and that helps for a sweeter market," Guerra said. (Her comments came before AI stocks fell and bumped this week when investors learned of the inexpensive and less data-hungry DeepSeek AI assistant from China.)

Some investors will feel safer shifting to more fixed-income products, even though they’re facing smaller returns that more aggressive approaches would bring. U.S. Treasury bonds, for example, pay more when the interest rates are high. "They're the gold standard of safe-haven assets," Guerra said.

Guerra noted that a unified Congress means that debt-ceiling decisions are more likely to pass and bills will be paid on time — essentially keeping the country’s credit score high.

"This is not just a U.S. monetary and fiscal dynamic around interest rates, but it's also that from a global perspective, global investors are liking Treasury [bonds] because they can also get a little extra yield and the asset is still considered sound."

What makes it tricky is the current president makes promises that may or may not pan out depending on how he can actually wield his power. "From a market perspective, that means the first half of the year could be a little bumpy," Guerra said. "And where we do see the potential for a more positive, less bumpy, smoother ride is in the second half of the year, and that's because you're going to have more policy certainty."

"We're looking to Congress to see whether or not they can make good on Trump's policy promises. What does that mean from a market perspective?" Guerra said. She used the example of his "drill, baby, drill" rallying cry.

"On a relative basis, if you're looking at clean energy versus traditional energy, in my opinion, I think that clean energy actually is an outlier and it is likely to outperform traditional energy," she said. When Trump talks about producing more oil without a demand for it, that actually causes oil prices to fall. Nobody likes oversupply.

"People are expecting a continuation of symbolic and actual draconian policy around clean energy, but what they're not accounting for is that, for example, with the Inflation Reduction Act, 80% of that money has already been spent." She added that the concentration is in Trump-supporting red states where they’re expecting a boost to the economy and a slew of new, good jobs.

"We think that there's less of a willingness for the actual legislators to claw back that money. … Trump can say whatever he wants. Actions speak louder than words, at least from a Congressional perspective, so we don't expect significant fallback in funding," she said. One of Trump’s first executive orders was to freeze all remaining funding to the states under the Act.

Stay the course

It’s rare to find an investment professional who will tell you to cash out completely. "There wouldn't be an environment where we would do that," Guerra said.

McBride likens it to switching jockeys mid-race. "I would caution against massive overhauls based on short-term volatility," he said.

But using another vehicle to generate cash, such as a reverse mortgage that draws from the equity of your home, might make sense.

"That reverse mortgage might be a way to keep your hands off your portfolio for a few years, too," he said.