Uncertain markets have a way of testing even the most experienced investors.
One moment, things feel steady and predictable. The next, markets are reacting to interest rate changes, inflation updates, global events, or shifts in economic sentiment.
During these periods, it’s completely normal to feel uneasy.
When portfolio values fluctuate, the instinct is often to act quickly to regain a sense of control, whether that’s selling investments, switching strategies, or moving to cash until things feel more stable.
At LBW, we see this often. And while the urge to act makes sense, short-term decisions don’t always lead to better long-term outcomes.
What is the illusion of control in investing?
It’s natural to want to feel in control, especially when markets are unpredictable.
But much of what drives short-term market movement is outside of anyone’s control.
Markets are influenced by:
- interest rate changes
- inflation data
- global events
- company performance
- investor sentiment
These factors are constantly shifting and interacting in complex ways.
Even experienced investors can’t consistently predict short-term movements.
That’s why, at LBW, we focus less on trying to forecast the market and more on building structured, long-term strategies that can adapt over time.
Why markets move in cycles (and always have)
The share market does not move in a straight line. It operates in cycles of growth, correction, and recovery.
These cycles are normal and expected.
- Growth periods = rising confidence and earnings
- Corrections = short-term declines or rebalancing
- Recovery phases = long-term return to growth trends
While uncomfortable in the moment, these movements reflect how economies adjust over time.
Historically, markets have recovered from downturns and continued to grow though the timing of recovery is never predictable.
Why emotional selling can reduce long-term returns
When markets fall, fear can drive decisions.
Selling investments during downturns can feel like the safest option, but it can also lock in losses and remove the opportunity to benefit from future recovery.
At LBW, we often support clients through these periods by helping them stay grounded in their strategy, rather than reacting to short-term movements.
Because in many cases, the bigger risk isn’t the market falling, it’s stepping out of the market at the wrong time.
The hidden risk: missing the recovery days
One of the most overlooked facts in investing is that some of the strongest market gains occur shortly after the worst declines.
However, these recovery periods are extremely difficult to predict.
Investors who exit the market often miss these critical growth days.
Over time, missing even a small number of recovery periods can significantly impact long-term portfolio performance.
This is why financial professionals emphasise:
It is not about timing the market; it is about time in the market.
Timing the market vs time in the market
Trying to time the market means attempting to predict when to buy and sell based on short-term movements.
Even experienced investors find this difficult to do consistently.
A long-term approach focuses instead on:
- staying invested through cycles
- benefiting from compounding returns
- reducing reactive decision-making
Our approach at LBW is to guide and educate our clients, helping them build strategies that are designed to work over time, not just in the moment.
Should you sell shares when markets are volatile?
No, in most cases, selling shares during market volatility can reduce long-term returns. Markets naturally move in cycles, and investors who remain invested are more likely to benefit from eventual recoveries. Emotional decisions during downturns often lock in losses and remove exposure to future growth periods.
Emotional investing and decision fatigue
Volatile markets do not just affect portfolios; they affect behaviour.
Constant exposure to financial news and short-term performance updates can create pressure to act.
Common emotional responses include:
- selling after declines
- moving to cash during uncertainty
- over-monitoring portfolios
- delaying long-term decisions
While understandable, these reactions are often driven by short-term emotion rather than structured planning.
Our role at LBW is to help investors refocus on strategy rather than noise.
What investors can control
While markets cannot be controlled, investors can control:
- investment strategy
- risk tolerance
- diversification
- time horizon
- discipline around decision-making
Strong investment outcomes are typically built on structure, not prediction.
Rather than reacting to markets, the goal becomes building a plan that can withstand them.
When it does make sense to review your investments
Not all change is reactive. There are valid times to reassess your portfolio, including:
- changes in income or financial position
- shifts in long-term goals
- changes in risk tolerance
- retirement or major life transitions
In these cases, adjustments should be based on planning, not short-term volatility.
Staying steady in uncertain markets
Market volatility is not a signal to abandon strategy. It is a reminder of why strategy exists in the first place.
While short-term movements can feel uncomfortable, reacting impulsively can reduce long-term outcomes.
A steady, structured approach helps investors stay aligned with long-term goals through both growth and downturns.
Working with an experiencedfinancial advisor can provide clarity during volatile market periods.
When markets feel uncertain, the instinct to act is often driven by a desire for control. However, real control in investing comes not from reacting to markets, but from having a clear strategy and staying disciplined within it.
Speak with an experienced Geelong financial advisor and ensure your investment approach remains aligned with your goals.
