“I’m going to sell and wait until things calm down to get back in.”
“I’m going to wait to invest and see what happens.”
“I’m going to buy when the coast is clear.”
Good luck with that.
Let’s say you’re sticking with that investing philosophy. And let’s use the current war in Iran (or whatever fill-in-the-blank reason you have because who knows what happened over the weekend) as the ground of your reasoning.
Are you really going to base your portfolio on what you think the impact of the Iran conflict is on your investments? Do you trust your knowledge of geopolitical scenarios and how that affects investment outcomes enough to justify your investment decisions?
Governments don’t even know what to anticipate when it comes to conflicts.
Jason Zweig, a financial writer for the Wall Street Journal, shares this anecdote:
Mark Higgins, an investment adviser at Irvine, Calif.-based IFA Institutional and author of “Investing in U.S. Financial History,” a book that chronicles markets from 1790 to the present, has a suggestion. He offers an excellent question to ask if anyone urges you to make a major portfolio move based on a prediction about where the war is headed.
“How can you say that,” Higgins suggests asking, “when the governments themselves don’t know what’s going to happen next?”1
You may be right in waiting to invest or in changing your holdings due to a long-term downtrend that can happen, but it’s hardly guaranteed.
Bull markets are much longer than bear markets. According to Vanguard’s data on stocks in developed countries since 1970, bear markets last an average of about nine months.2
Nine-month drawdowns can be a serious problem for some investors, but it’s only a problem if you didn’t plan for such things in your existing portfolios.
Is your nest egg built for these kinds of drawdowns? This is something that should be thought through well before a decline.
Pullbacks normally shouldn’t define your plan in the moment. They should be planned for well before they strike.
Let’s say you were the kind of investor that sold after every 5% pullback—fearing a further decline—and then bought back in at the next all time high when “things calmed down”.
How would you have done?
Horribly in comparison to staying invested, since 1990.
Remember there has been significant “bad news”—whether for financial markets or in conflicts over those decades—and yet the one who made investment decisions to sell based on bad news did much worse than those who stayed invested.
The biggest problem to investors is not often bad news but their response to the news.
Don’t get me wrong—your money still tripled based on the above active investment strategy, but it did not come close to the passive strategy of staying the course.
As always, make sure your investment strategies are tied to your financial plan and risk tolerance.
Staying the course in stocks can be a foolish strategy for some. You must have a portfolio with an allocation you can handle and one that aligns with your financial situation.
After all, there has been a “lost decade” before. The first decade of the millennium was 10 years of pain.
But don’t forget: usually the one that needs to calm down is you.
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- “How to Trade the War: Avoid Gimmicky Strategies and Overheated Assets”, March 20, 2026. Accessed online.
- https://www.vanguard.co.uk/content/dam/intl/europe/documents/en/bear-and-bull-chart-uk-en.pdf