Why You Should Always Prepare for Volatility Ahead

Ken Fisher opens by contextualizing the market impact of the Iranian war, noting that while it caused a notable downdraft, it fell short of being classified as a formal stock market correction. He outlines the standard definitions: a decline of 0-10% is considered normal volatility and noise, a decline of 10-20% is a correction, and a decline exceeding 20% with extended duration constitutes a bear market. The Iranian war's impact fell into that first, less severe category.

Fisher then broadens the discussion to the nature of stock market volatility itself, emphasizing that volatility is a routine and expected feature of equity markets. He frames volatility as a two-sided phenomenon — upward moves are 'pleasant volatility' while downward moves are 'unpleasant volatility' — but both are simply expressions of the same underlying characteristic of stocks.

He goes on to note that market drops can be triggered by real events, stories not connected to actual events, or entirely fabricated fears with no basis in reality. Because the timing of these drops is unpredictable, Fisher argues that investors should always maintain a state of preparedness for volatility rather than trying to anticipate specific downturns.

Finally, Fisher shares his market forecast for 2026, predicting that the first half of the year will be characterized by a begrudging, sideways, pulsating market without significant upward or downward movement — a description he says has matched what has occurred so far. He expresses belief that the back half of the year will deliver a more meaningful market advance, though he acknowledges uncertainty about the precise path forward.