When market jitters hit, check that you’re not derailing your investment strategy.
I generally avoid taking calls late on Friday’s, but I made an exception recently to talk with a client who was clearly distressed about the markets.
She’d sat through a presentation at work where an economist warned about the impact President Trump would have on the world.
“I’m going to sell the rental and I’m going to cash in my investments,” she said. Trump, she insisted, was going to “f***ing ruin everything.”
Three weeks later, in mid-March, share markets were 10% lower. Was she a prophet? Maybe. Or did we just endure a normal “dip”, like those that happen roughly every two years.
Since 1960, we’ve seen almost 34 market “corrections” just like this one.
Ultimately, we’re all responsible for how our own money is invested, but these decisions come with massive consequences.
So…
Should you trust your gut on money decisions?
To answer this, consider 3 other questions first:
- Do I have a mental bias?
- Are commercial interests influencing my financial decisions?
- And what’s the risk and reward with this decision?
Do I have a mental bias?
We might look back at March 2025 and call it ‘The Trump tariff tantrum’ – a noisy blip that shook nerves but faded away with time.
On the other hand, it could be the start of something much bigger, ushering in worldwide chaos. Trump could genuinely make everything great again, or he’s the Antichrist. There appears to be no middle-ground in these perspectives. Why?
Humans like you and me, often force complex systems or events into simple stories. It’s less mental effort, and it’s often soothing adopting pre-cooked narratives.
A 2018 study in the Journal of Consumer Research found that negative perceptions of a CEO reduce consumer trust in a brand by up to 30% – this is called the ‘horn effect’, and it works with politicians, too. Our impression about a person influences our feelings and decisions about unrelated things associated with them.
What’s the solution? The ‘horn effect’ dissolves when our financial decisions are focused on a longer timeframe. Technology, demographics and a shifting world order affect investment returns far more than a single president or prime minister does.
Are commercial interests influencing my financial decisions?
This dirty secret should come with a mandatory disclaimer:
The ‘industry’ wants you stay invested and keep investing no matter the circumstances. Banks profit from your debt, insurance firms benefit from your premiums, and investment advisers? Well, we seldom get medals for the wins, but we sure catch hell for the losses.
Buy the dip, upgrade the home,
stay invested, and above all,
earn more money.
It’s all justified because over time, market always rise (until it doesn’t).
Financial incentives don’t have to be obvious, either. Take the real-estate agent who whispers the right numbers in my clients’ ear, the economist who tries to engage with new bank customers, and even me, as I write this article or talk on a podcast.
Think about all the ‘free’ information out there to help you be a better investor. Influencers talking about money (‘finfluencers’) or sponsored content is everywhere you look.
Even legitimate mentions of financial products such as KiwiSaver or index funds can draw the wrong people into — or out of — investments at the worst possible times.
So, list all the people involved with your financial decision. Do they stand to gain or lose anything from it? Pay for independent legal, tax and financial advice if you can.
What could I win, and what could I lose?
When we fixate on the small stuff, we stumble on the big things. Consider the stakes.
My client was ready to sell her rental property at a $250,000 loss, pay $50,000 in real-estate fees and liquidate her investments, all because one economist’s presentation stoked her pre-existing fears about Trump.
That’s a high stakes move driven by bias, not maths. What could she lose? Her ability to retire in comfort.
Meanwhile, I’ve seen people with $10,000 agonise for weeks over picking the “perfect” index fund.
The irony? Once you’re invested, inaction and sticking with “good enough” often generates a better long-term result. Use your time and mental energy where it produces the biggest impact.
But when the stakes are big — buying a home, selling a rental or sinking all your savings into one investment, get your potential wins or loses looked over by advisers with no horse in the race.
Cognitive biases and external influencers can make us trust our gut more than we should.
Checklist to ask yourself:
- What’s at stake with this decision?
- Am I picking up pennies in front of a steamroller?
- Or am I gambling, literally, with house money?
Trump can indeed lose you money, but that’s because of your bias, not his orange hair and brash American vibes. If it’s not the president, check for commercial interests subtly influencing your next moves. And finally, measure the financial impact of each decision you make, before you make it.
When you’re aiming for wealth, keep your focus on the longer- term realities you can see, not the short-term noise.
Need help with your strategy? Get in touch
