The major U.S. stock indexes fell sharply last week, nearly losing 6% across the board as investors feared that the imposition of recent U.S. tariffs could lead into a global trade war.

In the cash market, the benchmark S&P 500 Index settled at 2588.26, down -6.0%. For the year, the index is down 3.2%.

The blue chip Dow Jones Industrial Average finished the week at 23533.20, down 5.7%. It is down 4.8% for the year.

The tech-driven NASDAQ Composite closed at 6999.59, down 6.5%. It is still up 1.3% for 2018.

Forecast

Although most long-term investors still believe the foundation of the bull market remains intact, with economic conditions likely to improve both in the U.S. and abroad, there are mounting uncertainties that could drive the price action over the near-term.

These uncertainties are increasing turmoil in the White House, ongoing Fed tightening, global trade tensions and unpredictable geopolitical conditions.

The recent price action strongly suggests that investors have to be prepared for elevated volatility and more moderate market returns. Last year, investors were blessed with low volatility and almost riskless high returns. This year is likely to be different so stop fighting the tape.

Investors can choose to ride out the volatility and risk giving back some of their gains. They can also choose to pare their long positions and hope to reinvest at more beneficial price levels.

Over the short-run, traders are likely to have opportunities on both sides of the market. This flies in the face of those traders who continue to laugh about the success they had buying the dip. In a market that is being dominated by short-selling and position liquidation, these “experts” who made money when the market was rallying on low volatility last year, are actually feeding the sell-off.

If you are reading this article while wearing the hat of a trader then you should embrace the volatility. If you know how to trade and manage risk then you should be cleaning up on the downside because the market is falling faster than it went up.

A few months ago, some of the major investment banks were saying the markets were overbought and ripe for a correction. Now that this is happening, the money managers are crying about volatility and blaming President Trump “tantrums” for the sell-off. Perhaps they never heard about stocks being overvalued.

It’s not going to be an easy trade this year so you can suck it up and learn to manage risk, or fade with the investors of the past who chose to ride out a correction. There are reasons why they call it a market. So I welcome those who continue to buy the dips because someone has to give the sellers a chance to get in the market.