Watching the wild gyrations of the stock market every day is not healthy, and even those of us whose job it is to analyse and comment on events need to step away every now and then to try and see the big picture.

Our motto throughout the sell-off prompted by president Donald Trump’s ‘Liberation Day’ tariff announcements has been ‘keep calm and carry on’, as typically major sell-offs have presented good buying opportunities for long-term investors.

As the dramatic turnaround in stock market fortunes seen after Trump hit pause on the most punishing ‘reciprocal’ tariffs shows, the best days for the market often follow some of the worst.

Since none of us can control what happens in the market, nor can we know with any certainty when the low has been reached, a productive way to use this time is to make a ‘shopping list’ of stocks you would want to own and the prices at which you would buy them.

It’s often said you make a profit when you buy rather than when you sell, because your purchase price dictates the returns you can generate. Buy too dearly and your returns will be poor, but buy cheaply with a ‘margin of safety’ and your upside is far greater.

As for markets: ‘The US administration’s attempt to reset the global trade framework through tariffs is causing a volatility shock through markets,’ says Mark Richards, head of dynamic multi-asset investing at BNP Paribas Asset Management.

‘Now the question is which utility curve Trump is trying to maximise: one, bring revenues or two, bring jobs back home or three, negotiating tariffs & trade barriers. The situation is tricky given that the three curves are mutually exclusive. Signing trade deals could be ahead, but the range of outcomes is wide,’ cautions Richards.

One approach to the situation would be to look for companies with strong pricing power in niche markets, preferably providing services rather than manufactured goods and potentially with low or no exposure to the US economy.

It also helps to think as if you were buying the whole business rather than just a few shares, which means focusing on companies with high-quality asset backing, including property, and solid free cash generation which can be reinvested at high rates of return.

Companies which tick all these boxes and are trading at attractive valuations are likely to appeal not just to private investors but to private equity funds who invest for the very long term and can ride out market fluctuations. 

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