Is the Engine Broken — or Is It Just Idling?

By Andy Wearing, Director, December 2025

When markets fall sharply, it rarely feels theoretical.
It feels personal.

Portfolio values dip. Headlines grow louder. Doubt creeps in.
And the same question tends to surface:

“What if this time really is different?”

To answer that, it helps to step back and separate two things that often become confused during periods of market stress:

The price of investments today
The long-term value of the businesses behind them

They move together in calm conditions.
They often part company during periods of fear.

Prices React. Businesses Adapt.

Market prices respond instantly to emotion.
Fear, relief, speculation and uncertainty are all reflected in real time.

Businesses, however, change more slowly. Their long-term value is shaped by earnings power, competitive position, innovation, capital discipline and management decisions taken over many years.

When uncertainty rises, prices can swing far more dramatically than the underlying reality justifies.

That gap — between price movement and fundamental value — is where most investor discomfort comes from.

When Volatility Distorts Judgement

During sharp market declines, it becomes harder to distinguish between:

A temporary slowdown, and
A permanent breakdown

Emotion has a way of blurring that line.

Investors begin to interpret falling prices as evidence that something is fundamentally “wrong”, rather than asking whether markets are simply reacting to short-term uncertainty.

This is usually the point at which long-term plans are abandoned and capital is moved to cash — often just as future returns are improving.

A Better Question to Ask

In moments like these, we find it helpful to reframe the discussion with a simple question:

Is the engine broken — or is it just idling?

An engine at idle can look unproductive.
It makes noise. It consumes energy. It isn’t going anywhere.

But it still works.

When conditions improve, it accelerates.
Nothing fundamental needs to change.

Strong Businesses Idle — They Don’t Stop Working

Well-run companies behave in much the same way during periods of economic stress.

When growth slows or uncertainty rises, they don’t simply fail. They adapt:

Costs are controlled
Capital is preserved
Weaker operations are trimmed
Stronger competitors are acquired
Innovation continues, often behind the scenes

Earnings may dip. Dividends may grow more slowly or pause.
But the ability to create value rarely disappears altogether.

Markets often assume the engine has failed.
In reality, it is usually just running at low speed.

Why Share Prices Fall More Than Fundamentals

History shows that share prices tend to fall much further — and faster — than company profits during periods of stress.

That doesn’t mean markets are “wrong”. It means they are forward-looking and emotionally driven.

Prices discount worst-case scenarios long before outcomes are known.

For long-term investors, the key question isn’t whether markets are volatile — they always are — but whether the underlying engines of global businesses are still capable of growth over time.

In most cases, they are.

The Cost of Acting Too Soon

Selling during periods of fear often feels sensible in the moment. It offers relief.

The problem is what comes next.

Markets rarely announce when they are turning.
The strongest recoveries tend to begin when confidence is still low.

Those who step aside often struggle to re-enter — not because they lack information, but because uncertainty never truly disappears.

Long-term outcomes are shaped less by dramatic decisions and more by the discipline to stay invested through uncomfortable phases.

What This Means for Long-Term Planning

None of this suggests markets can’t fall further in the short term.
They can.

But successful long-term investing has never depended on predicting the next quarter or the next headline.

It depends on:

Owning resilient businesses
Remaining diversified
Aligning portfolios with time horizons and real-world needs
Avoiding irreversible decisions driven by short-term emotion

An idling engine can feel frustrating.
But it is very different from a broken one.

A Calm Approach in Noisy Times

Periods of volatility test patience.
They also test perspective.

At Oak Four, our role is not to predict the next market move, but to help clients distinguish between noise and substance — between temporary slowdowns and genuine long-term risk.

Before changing course, it is always worth asking: