In markets where headlines change by the hour, many investors fall into a familiar trap - the need to act. A portfolio wobble prompts a sell; a rate cut forecast triggers a rotation and another geopolitical flare-up, another hedge.

The problem? This impulse to act is not always strategic - it’s psychological - and increasingly, we see investors mistaking activity for control.

 

The cost of “doing something”

On the surface, portfolio adjustments can look prudent. But dig deeper, and you’ll often find something else: anxiety-driven decisions rooted in behavioural biases, not fundamentals.

The most common culprits?

· Loss aversion: Investors feel the sting of losses more acutely than the pleasure of gains, prompting premature exits.

· Overconfidence: Many overestimate their ability to “read” markets or time turns.

· Control bias: In periods of uncertainty, action feels like control. But it’s often an illusion - driven by discomfort, not discipline.

These behaviours manifest in subtle yet damaging ways: excessive trading, constant shifts in allocation, and defensive cash hoarding that leaves long-term goals behind.

 

The hidden impact on performance

Over-management rarely improves outcomes. Instead, it tends to:

· Erode returns through higher trading costs and tax drag.

· Break from core strategy and increase portfolio drift.

· Lead to emotional mis-timing - buying too late, selling too soon.

· Introduce decision fatigue, especially for clients managing their own wealth.

In short, activity often gives the illusion of control but undermines discipline, and, with it, long-term performance.

 

Changing structure of client portfolios

Post-2022, we’ve seen more examples of this behaviour:

· Persistent cash overweight positions, even in inflationary environments.

· Tactical tilts that lack conviction or are reversed within weeks.

· Hedging strategies initiated not from macro fundamentals, but from news-cycle anxiety.

It’s important to remember, this isn’t irrational; it’s human. But it needs to be managed with structure.

 

Why “doing less” is a disciplined choice

One of the most powerful shifts an investor can make is to understand that restraint is not the same as inaction.

In fact, professional-grade portfolios are built to absorb volatility without constant intervention:

· Using pre-defined rebalancing triggers, not emotional ones.

· Segmenting portfolios by investment purpose, not just asset class.

· Building flexibility into strategy, so changes are strategic, not reactive.

Discipline creates clarity, and in volatile markets, clarity is a differentiator.

 

Reframing the adviser role

For wealth advisers and institutional gatekeepers, this also reframes the value proposition. Investors don’t just need products, they need perspective.

That means helping clients to:

· Stay anchored to long-term goals during short-term noise.

· Recognise their behavioural patterns and how these affect outcomes.

· Understand that well-structured portfolios are built to weather discomfort - and that acting on discomfort can be destructive.

 

Conclusion: The real alpha is knowing when not to react

Markets test more than our portfolios; they test our psychology. In times of uncertainty, the desire to act is natural, but the most successful investors aren’t the busiest. They’re the most intentional.

For investors, that means moving beyond the illusion of control and leaning into structures that align with purpose, not pressure.

In today’s environment, true control doesn’t come from doing more, it comes from knowing what to ignore.

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