The convergence of U.S. tariff policies, algorithmic trading, and geopolitical recalibrations is generating unprecedented volatility in public markets, compelling institutional investors to rethink traditional allocation strategies. The CBOE Volatility Index (VIX) has remained elevated above its long-term average of 20, signaling consistent fear among investors. Meanwhile, the S&P 500 experienced a sharp 10% correction this year, only to rebound on short-lived optimism after temporary tariff suspensions, volatility reminiscent of the early COVID era, but without a clear recovery trajectory.
"On the surface, what we're seeing might resemble past cycles of uncertainty," says Joey Petelle, CEO of Sentinel Crest, a capital formation firm that specializes in precision-driven solutions for complex financial transactions and cross-border M&A. "But underneath, the foundation is different. We're watching a disruption of decades-long global relationships that once stabilized the global markets."
In recent times, the global investment community has had to navigate volatile tariff implementations that change with little notice. These abrupt shifts, once used sparingly as economic levers, have become over reaching negotiation tools, injecting uncertainty into the world's largest supply chains. While the impact of such tariffs are often localized at first, their ripple effects span industries and continents.
To understand how these dynamics are changing global relations, Joey offers a simple analogy: "Imagine going to the same mechanic for 10 years, trusting them, relying on their fair prices. Then one day, you show up with a car emergency, and they triple the cost with no warning. While you're looking for a new mechanic you'll pay once, maybe even twice, but you won't come back a third time." This is what is happening globally. Countries long dependent on stable economic relationships will diversify.
Multinationals are responding to these precarious conditions with Capital expenditure freezes, supply chain reconfigurations, and delayed expansion plans. "This kind of stop-start trade environment doesn't just reduce visibility—it alters investment behavior entirely," says Joey. "Where we once saw confidence in long-term planning, now we see caution and risk-aversion in public markets."
Indeed, data from the World Trade Organization suggests that tariff-related trade restrictions now cover over 10% of global goods trade, a rise from a decade ago. Combined with retaliatory measures from trading partners, these dynamics have dampened growth forecasts and heightened global market volatility.
Compounding the issue is the rise of algorithmic trading, which now accounts for nearly 60% of U.S. equity volume. These automated systems, built to execute trades based on programmed triggers, often respond to tariff news or geopolitical shifts within milliseconds, well before human investors can react.
The result? A cascade of sell-offs or buying sprees that often lack fundamental justification.
"If a large-cap stock drops half a percent in five minutes, algorithms don't ask why; they just sell," explains Mr. Petelle. "That sale triggers another, and suddenly you have a feedback loop. The machines are chasing momentum, not logic." This reflexive behavior creates outsized moves in equity prices, almost universally divorced from actual business performance.
In contrast to the turbulence in public markets, private companies remain largely insulated from such short-term shocks. Their valuations aren't dictated by daily headlines or algorithmic trades but by long-term fundamentals: revenue, profitability, and growth prospects. "The agility of private firms is their superpower," Petelle states. "They aren't thrown about with the same whiplash impacts of the public market as their main focus is on strategic vision and operational results."
Private companies in sectors such as manufacturing, high-tech, and consulting have a distinct edge. They can pivot quickly, restructure supply chains, and make bold decisions without the scrutiny of public shareholders or the pressure of real-time stock prices.
Historically, private equity has outperformed public equities with lower volatility. In 2025, this gap is widening as tariffs erode public market margins. Even behind the scenes, asset allocators are adjusting strategies, boosting their private market allocations, and seeking exposure to markets such as direct private equity stakes in sectors less exposed to trade wars, such as SaaS, healthcare, or IT. Venture capital funds targeting supply chain localization technologies are also an option they choose. Secondary market purchases of pre-IPO companies are delaying public debuts due to market instability. IPO's have literally stagnated. "This isn't just a defensive play," Mr. Petelle explains. "It's about generating real, uncorrelated returns. Private markets are where value is being built, not just traded."
At Sentinel Crest, deal flow has surged in the wake of recent market shocks. The firm's proprietary valuation framework discounts short-term noise and emphasizes cash flow durability, making it well-suited for navigating uncertainty. In 2025, Sentinel Crest is closing a wave of take-private transactions in fintech, advanced manufacturing, and enterprise software. "We're architecting exits from instability," Joey says. "The institutions coming to us want to step off the rollercoaster. They're looking for control, consistency, and compoundable value. Private markets give them all three."
While the public markets continue to react to every tremor in global trade, the center of gravity is shifting. Investors aren't abandoning equities altogether, but they are rethinking how and where value is best created.
