The Turbulent Stock Market Becomes a Classroom for Student Investors

Writer

Hillary Chabot

Hillary Chabot is a writer for Babson Thought & Action and Babson Magazine. An award-winning journalist, she is known for her insightful reporting and dedication to detailed storytelling. With a career spanning over two decades, she has covered a wide range of topics, from presidential campaigns and government policy to neighborhood issues and investigative series. As a reporter for The Boston Herald, Hillary earned a reputation for tenacity and integrity. Her work at Babson College fuels her passions—to learn something new every day and conduct thoughtful, empathic interviews. She’s thrilled to be at Babson College, where students, faculty, staff members and classes provide compelling copy daily.

May 20, 2025

College students look at computer screen during a financial investment class.

Babson students learn about investing in the Stephen D. Cutler Center's finance lab. (Photo: Nic Czarnecki/Babson College)

Listen

A 90-day reprieve from steep international tariffs has triggered another whiplash-inducing reversal of the stock market—and while investors applauded the recent surge, the nail-biting volatility that has plagued the market for the past three months has put many on edge.

The turbulent conditions have been a boon for one group, however, said Babson College finance professors Ryan Davies and Patrick Gregory—the young investors they oversee.

“Turbulent markets offer rare opportunities to buy high-quality stocks at attractive prices,” Gregory said. “Students can also selectively add to existing holdings they believe will weather the storm.”

Gregory, a professor of practice and the managing director of the Stephen D. Cutler Center for Investments and Finance, oversees both graduate and undergraduate students as the director of the Babson College Fund, a class where students oversee $6 million of Babson’s endowment fund.

Here, Gregory and Davies offer their advice—and the lessons learned—from navigating a volatile stock market.

Strategic Thinking

The strategy mirrored the one that students employed in 2020 during the COVID crisis. Back then, students outperformed the S&P 500 by over 1,000 basis points through disciplined research, long-term conviction, and well-timed trades. “That strategy paid off, and our students are applying similar methods now,” Gregory said.

The key, Gregory emphasized, is to stay focused on identifying undervalued companies with long-term upside potential.

“Students are working with teammates and mentors to close the gap and outperform by year-end,” he said.

Stay Focused

Davies said that while volatility presents opportunity, it also requires discipline.

“Babson College Fund managers should continue to follow the same process for finding value and opportunities within their assigned sectors,” he said.

That discipline becomes even more important if things get rockier.

“For the past 70 years, the world’s financial system has been based on having the U.S. dollar as the dominant reserve currency and U.S. government debt as being risk-free,” Davies said. “While unlikely, we would be entering uncharted territory if that system started to unravel.”

Lessons for New Investors

Both professors agree that newer investors—especially those contributing to 401(k) or 403(b) accounts for the first time—should use market turbulence as an opportunity to reassess, not retreat.

“Don’t overreact to short-term swings, but do re-evaluate your allocations to make sure they align with your time horizon and goals,” Davies advised. “Many target-date funds do this automatically, but it’s still smart to understand what you own.”

Gregory added that long-term thinking and quality stock selection tend to win out over time.

“Trying to time the market rarely works,” he said. “Focus on fundamentals, be patient, and learn from every market cycle.”