Have you ever made a decision when you were scared or angry and later regretted it? We all have. And the same thing happens in investing.
When markets get unpredictable, emotions often take the driver’s seat. Even experienced investors can panic, move to cash, and miss the recovery that follows.
In my latest video, I share what I’ve seen over 25 years working with clients during volatile markets and how staying calm can make all the difference for your long-term results.
Sometimes steady thinking matters more than quick reactions.
Transcript
Quick question, have you ever made a decision when you were angry or scared that you later came to regret? Of course you have. We all have. It’s human nature.
Unfortunately, the same thing can happen with investing. When market volatility comes around and when the level of uncertainty rises, our emotions can easily override our rational thinking. And sometimes even the best advice cannot compete with outright fear.
How External Events Influence Investor Behavior
Hi, I’m Iván Mendoza with Mendoza Private Wealth. Over the years, I’ve seen how external events, whether it’s political uncertainty, economic headlines, or global crises, can weigh heavily on investors. Regardless of the specific situation, uncertainty creates anxiety.
And anxiety leads to poor investment decisions. I’ve had several conversations over the years with clients who said they want to move to cash during volatile periods. These are smart, successful people who have weathered market downturns before.
When Fear Takes Over During Market Volatility
But sometimes, when headlines feel so overwhelming, fear takes over. The conversation goes something like this: “Iván, I want to sell everything and go to cash. I know you’re going to tell me not to do it, but I just can’t handle the uncertainty right now.”
Now, of course, I’m always going to advocate for what I think is in the client’s best interest. But the client is the boss. Clients make their own decisions. And sometimes, even with the best advice, emotion wins over logic. Here’s what I’ve seen happen in situations like this and why recognizing this pattern matters to you.
The Cost of Moving to Cash Too Soon
When investors panic and they move to cash during volatile times, they often miss the recovery. I’ve witnessed this multiple times throughout my career. Someone sells at exactly the wrong moment and then watches from the sidelines as the market rebounds.
It’s one of the most frustrating aspects of this business. Not because of any financial impact to me, but because of what it means to the investor’s long-term goals. The timing of market moves is inherently unpredictable.
Why Market Timing Rarely Works
I can’t tell you when the next market correction will come, or when the volatility will begin or end, and neither can anyone else, for that matter. But history shows us that some of the market’s best days come right after its worst periods. When investors are sitting in cash, earning modest returns, they miss those recovery days entirely.
And missing just a few of the market’s best days can significantly impact long-term returns. Here’s what I’ve learned in 26 years of doing this work: being an investment advisor isn’t just about picking investments and building portfolios.
The Role of Behavioral Coaching in Wealth Management
A big part of my job is behavioral coaching, helping people navigate the emotional side of investing. Sometimes, even with decades of experience with all the right data analysis, clients still struggle to overcome fear. And that’s okay. It’s human.
The key is to recognize when emotions are driving your decisions and to have systems in place to help you stay disciplined. So what can you do when uncertainty creates anxiety around your investments?
Practical Steps to Stay Disciplined During Market Uncertainty
First, remember, volatility is normal. Markets go up and down. And political events create a lot of noise, but they rarely change the long-term investment fundamentals.
Second, focus on what you can control. Your time horizon. Your asset allocation. Your cash-flow discipline.
Third, if you’re still feeling overwhelmed, talk to someone—whether an investment advisor, a trusted friend, or a family member—who can provide perspective.
Finally, remember that it’s time in the market that beats trying to time the market. Missing just a few of the market’s best days can significantly impact your long-term returns.
Staying Composed Through Market Downturns
Look, I can’t predict when the next market downturn will happen or when it will recover. What I can tell you is that staying disciplined during uncertain times, while difficult, is one of the most important things you can do for your financial future.
Are you feeling anxious about your investments? Do you need someone to help you think through your strategy when volatility comes around? I’m here to help.
Sometimes the most valuable thing an advisor can provide isn’t the next hot stock tip, it’s a steady voice during turbulent times.
Thanks for watching.
