Rules-based investment strategies—and a holistic portfolio approach—can help advisors guide their clients through market noise, volatile environments, and economic uncertainty.

L​ike many others, I am always interested in what drives the equity and fixed-income markets on a daily basis.

Some days, it is a total mystery—despite the financial press and investment community offering no shortage of opinions on specific reasons.

Other times, it is crystal clear.

That was the case in early April 2025, when the administration’s announcement of broad and steep tariffs led to market declines of 10% in a few days.

But when markets started to rebound in earnest in late April, recently reaching new all-time highs, the reasons behind the strength of the rally were harder to pin down.

One prominent analyst and strategist recently told CNBC that this has been “the most hated V-shaped rally in history,” given that many hedge funds and high-net-worth investors have “missed the bulk of the rally” due to skepticism around trade policy and the related uncertainty surrounding corporate earnings.

It seems like everyone has a different take on what will drive markets over the second half of the year. On any given day, investors may see warnings of “a global economic downturn starting later this year” alongside optimistic headlines like “Can the S&P 500 hit 7,000 by year-end?”

Plenty of factors—falling under the broad and often competing categories of fundamental and technical analysis—can influence markets each day, week, month, or year. They can include macroeconomic trends, fiscal and monetary policy, corporate earnings, economic data, company news, government action, elections, geopolitical risk, seasonality, sentiment of various market participants, and a variety of technical indicators.

I think it is fair to say that so far in 2025, news-driven sentiment has fueled the frequent wild market swings, often overshadowing time-tested technical-analysis tools such as pattern and trend recognition, mean reversion, relative strength, moving-average analysis, and supply and demand indicators (such as support/resistance levels or overbought/underbought conditions).

How news affects investor behavior

While I am not an investment expert, as a communications specialist, I find the impact of “news” on investment decision-making and investor behavior to be both meaningful and complex.

We have had no shortage of important news this year, starting with the new administration’s “shock and awe” policy decisions and executive orders, the impact of DOGE actions, uncertainty around inflation and energy prices, AI’s continued growing influence, shifts in consumer and business sentiment, ongoing tariff initiatives, GDP outlooks and other economic trends, speculation around interest-rate cuts, and serious geopolitical tensions.

Bespoke Investment Group provides a useful visual review of major news headlines alongside the S&P 500’s performance. July’s recap illustrates just how much investors have had to digest in recent months.

Source: Bespoke Investment Group

As Investopedia explains, government news releases—and really any major news event—can move markets quickly:

Two points are worth noting here:

1. Short-term swings have been amplified by technology. Large institutions increasingly use artificial intelligence and sophisticated news-based trading programs to respond instantly to headlines. This leaves little opportunity for the average investor to “compete” in the short term.
2. Longer-term trends are often counterintuitive. Immediate market reactions may not match the true significance of the news. How often have you seen a “Fed announcement day” trend reverse within 48 hours? Likewise, haven’t you often wondered who decides when “bad news is good news” (and vice versa)? Again, an individual self-directed investor is often left in the dust.

A behavioral finance expert and Wall Street veteran addressed many of these issues in the article “How much attention should you really pay to the news?” He noted that both market professionals and individual investors face behavioral pitfalls when interpreting headlines:

Jay Mooreland, MS, CFP, is an expert in behavioral finance and coaching financial advisors. In his book, “The Emotional Investor: How Biases Influence Our Investment Decisions … And What You Can Do About It,” he writes,

He adds,

The approach of rules-based investment management

We have often written about third-party managers who specialize in quantified, active investment management, with a focus on strategic diversification.

These managers are undoubtedly attuned to market-driving news and data. But, in the words of one manager, “There will always be a bullish, bearish, and neutral way to interpret the news that the financial markets are faced with every day. Which one is correct? Who can say?”

The manager goes on to say that though his firm may have opinions on, say, the economy or the impact of an election, those opinions do not affect its investment decision-making. He continues,

I think it is reassuring for financial advisors and their investor clients that whether markets are facing a “news-rich” and volatile scenario—or a relatively benign period—they can employ a holistic portfolio approach and strategies that can be responsive to virtually any market environment.

In his book, Mr. Mooreland refers to a quote from Wall Street Journal columnist and author Jason Zweig (influenced by Benjamin Graham) that I think sums things up well: “Investing intelligently is about controlling the controllable.”

In an interview with our publication, Oregon-based veteran advisor Larry Mathis provides his take on this theme:

The opinions expressed in this article are those of the author and the sources cited and do not necessarily represent the views of Proactive Advisor Magazine. This material is presented for educational purposes only.