Blog

The best investors aren’t defined solely by knowledge or access to information. Much like world-class poker players, their real edge is mental game—the ability to stay composed and make sound decisions under pressure. Maria Konnikova, in her work on professional poker, notes that what separates the truly elite from the merely good is psychological fortitude: the capacity to perform consistently despite setbacks, mistakes, and poor short-term results. Investing is no different. Success often hinges less on finding the “right” stocks and more on maintaining discipline when fear and uncertainty are highest.

Lately, the headlines have zeroed in on artificial intelligence. Some say AI is in a bubble and warn of a coming burst. But AI is just the latest storyline. Not long ago, it was inflation, rising interest rates, or fears of recession. Add in concerns about high stock valuations and a slowing economy, and there’s always something to make investors uneasy. For many, the natural question becomes: What should I do?

2025 has tested investors with market dips from tariff shocks, geopolitical tensions like the Israel–Iran conflict, and sliding consumer confidence—yet the S&P 500 has rebounded more than 24% from April’s low. In such volatility, the temptation to pull out is strong, but doing so risks missing the recovery. The key is to focus on what you can control, stick to your long-term financial plan, and ride out the turbulence with your goals in sight.

April showered us with a few days of strong stock market losses. The market lost nearly 5% one day, followed by 6% the next day for a total drawdown of 18% from recent highs. When such strong losses occur, it is totally natural for our brains to go haywire. The losses, accompanied by negative headlines, feed our anxiety and can trigger strong urges to get to safety by selling now and asking questions later. But following those urges is seldom the best response. A better response is to take a step back regain composure. In my experience, I have found the following four actions to be helpful during difficult market times.

There’s no shortage of things to worry about today—tariffs, economic uncertainty, global unrest—and all of it can impact our financial future. The media often magnifies these concerns, focusing on fear because it grabs attention. Over time, this constant exposure can affect our mood, cloud our thinking, lead to unproductive decisions, and—most importantly—erode our personal happiness.

Investors often ask about how the economy is doing. This is no surprise because we are constantly inundated with information; it can be difficult to draw accurate conclusions when much of the information is biased and incomplete. The answer to that question, and really question, depends largely on where you get your information. The primary source of investor information is the financial media. Yet, the media often leads with fear, reports of crises and the need to act urgently – because that is what gets people to tune in. Rarely, if ever, do you get the full story.

The simplest and truest reason as to why we diversify is that we don’t know what assets will do very well in the future, and which assets will do poorly. Diversification is the evidence that we cannot accurately and consistently forecast the future. When we invest during a period where one asset vastly outperforms all others, it can be very frustrating to remain diversified. We may be tempted to sell the underperformers and invest more heavily in that which is outperforming. Despite these inclinations, there is strong evidence to suggest that diversification is the best strategy.

The basic premise behind successful investing is to buy an asset at a low price and sell it at a higher price. Simple and straightforward. But doing that often requires discernment, patience, and discipline – which can require near superhuman strength to do. It is not easy!   

Most investors love economic and market forecasts. With the markets so uncertain and volatile, our brain craves some sort of idea of what the future holds. But economies and markets are unpredictable – evidenced by the fact that no one can consistently predict them with accuracy.

Dive into the world of market forecasts and their accuracy. Discover why financial predictions often miss the mark and why sticking to your investment plan beats relying on unreliable forecasts.