Market crashes don’t have to crush portfolios—UBS says staying calm, holding liquidity, and capitalizing on volatility can turn chaos into a wealth-building advantage.
UBS: This Is the Worst Time to Sell—3 Reasons Pullbacks Lead to Long-Term Gains
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Why UBS Says Calm Heads Win Big During Turbulent Market Cycles
UBS has urged investors to remain steady during recent market turbulence, offering three core rationales to support continued confidence despite escalating volatility. In a note issued April 3, the bank’s U.S. editorial team pointed to historical resilience of market downturns, the protective benefits of a liquidity strategy, and the tactical opportunities presented by heightened price swings.
First, UBS emphasized that while painful, market sell-offs are generally temporary. The firm highlighted that market declines of over 10% are considered corrections, while drops beyond 20% constitute bear markets. The S&P 500 is currently in correction territory, but UBS advised investors to plan for the possibility of a bear market. The bank detailed:
During bear markets since World War II, the S&P 500 fell an average of 32% from peak to trough, and it took an average of three years before reaching a new all-time high.
Those with diversified holdings saw smaller losses; a 60/40 stock-bond mix declined an average of 19%, recovering in approximately two years and three months.
Next, UBS explained the importance of a liquidity strategy to prevent lasting losses during market downturns. “With this financial cushion, we can maintain our lifestyle comfortably while we wait for markets to recover,” the firm stated. “A well-funded liquidity strategy—holding enough cash, bonds, and borrowing capacity to cover spending needs for the next 3–5 years—is enough to fully insulate our day-to-day spending from market volatility.” UBS added: “Tapping into the liquidity strategy instead of liquidating investments at ‘ bear market prices’ can help us to avoid the risk of permanently locking in losses.”
Lastly, UBS encouraged clients to view volatility as a chance to act strategically. This includes portfolio rebalancing and tax-loss harvesting. The bank shared:
Volatility tends to improve the risk/return profile of options strategies and structured investments, allowing you to potentially increase your portfolio’s yield and/or growth potential while maintaining protection against potential losses.
