Stock markets gave us our first surprise of the year this week.
Every January I put together a list of behavioral predictions for the year ahead. They are never about predicting markets, sectors, or interest rates. They are about predicting behavior.
And one prediction shows up every single year.
We will be surprised by something…actually we usually see several surprises throughout a year.
Earlier this week we experienced the first surprise. Over the weekend, tensions involving Iran pushed oil prices higher, the media immediately went into full amplification mode, and stock market futures plunged. It looked like we were going to have an awful week.
When scary geopolitical headlines show up and markets sell off at the same time, it creates the perfect emotional storm for investors.
If history is any guide, it probably will not be the last surprise of the year either.
The important question is not what the surprise is. The important question is how investors respond to it.
The short term game versus the long term game
There are two completely different games happening in the market at the same time.
The short term game and the long term game.
The short term game is driven by headlines, daily market moves, and the constant need for media outlets to capture attention. Headlines only have value for a single day, so the incentive is always to make the story sound urgent and important right now.
Short term traders also play that game. They are trying to profit from the next move, the next reaction, the next piece of news.
But when investors sit down with their advisor and build a financial plan, they are not signing up to play that game.
They are signing up for the long term game.
They are talking about retirement that may be decades away. They are talking about funding education. They are talking about generational wealth and financial independence.
None of those goals operate on a daily news cycle.
Yet the temptation to react to short term noise is always there. When markets move and headlines become dramatic, the emotional brain begins to whisper that something must be done immediately.
That is often where mistakes begin.
Markets climb a wall of worry
One of the most consistent patterns in market history is that markets advance while investors worry.
In fact, they tend to climb what many investors have heard described as the wall of worry.
Every cycle brings a new set of concerns. A new reason why this time might be different. A new headline that feels urgent and convincing in the moment.
Over the past decade alone we have seen countless examples.
Trade wars. Inflation scares. Banking stress. Pandemic shutdowns. Recession forecasts that seemed almost certain at the time.
Each of those moments created a very compelling emotional case for caution.
Yet over longer periods of time, markets have continued moving forward.
That does not mean markets move in a straight line. Short term pullbacks are normal. Volatility is part of the process.
But those pullbacks are usually short term events layered on top of a long term trend.
Which is why one of the most helpful reminders for investors is also one of the simplest.
This too shall pass.
The real opportunity during uncertain moments
Ironically, the moments that create the most fear are often the moments that create opportunity.
Anytime markets experience a meaningful short term decline because of geopolitical tension or economic headlines, disciplined investors often have two productive choices:
- If they have cash or bonds available for rebalancing, they may have the opportunity to allocate into equities at lower prices
- If not, the most powerful decision may simply be maintaining discipline and sticking with the plan
That may sound simple, but from a behavioral standpoint it is often the hardest decision of all.
Because the environment surrounding investors during those moments is designed to make staying disciplined feel uncomfortable.
This is exactly why behavioral coaching has become such an important part of modern financial advice. Technical portfolio management is only part of the job. Helping clients navigate fear, uncertainty, and emotional reactions is just as important.
It is also why I spend so much time working with advisors on the practical side of behavioral finance. Scripts, framing techniques, and simple behavioral tools can make an enormous difference during moments like this.
Many of those frameworks are what advisors learn inside the Behavioral Advisor Academy, where the focus is not academic theory but how to actually communicate with clients when emotions are running high.
Because the next surprise is coming. We just do not know what it will be yet.
And when it arrives, the investors who remain grounded in their long term plan will almost always have the advantage.