With all the conflict in both the middle east and Russia/Ukraine there has been increased volatility within the markets and this leaves investors on edge.
We often see investors jumping ship and abandoning their investment journeys due to emotional reasons resulting in their investment goals not being reached.
Market volatility is more than just market noise – it is the ultimate stress test of investor behaviour.
When prices swing sharply, clients’ true attitudes toward risk, loss and uncertainty are revealed, often very differently from how they described themselves in calm times.
Volatility strips away theory and exposes emotion.
One of the most powerful forces at play is loss aversion.
A portfolio drop of 10% often feels twice as painful as a 10% gain feels enjoyable.
Faced with frightening headlines and red screens, many clients become tempted to “stop the pain” by selling at precisely the wrong time.
In doing so, they convert temporary, paper losses into permanent capital destruction and risk missing the eventual recovery.
Volatility also causes time‑horizon shrinkage. Long‑term investors who were comfortable thinking in five‑ to ten‑year blocks suddenly obsess over daily moves, social media posts and news alerts.
Their focus narrows from the destination to the bumps in the road, increasing anxiety and the urge to act.
Herd behaviour and overconfidence are tested too. Some clients want to copy what “everyone else” seems to be doing, whether that is panic selling in a crash or chasing whatever has just shot up.
Others, previously overconfident in their stock‑picking ability, are humbled when markets move against them and start to question their own judgement.
For the financial planner, volatile periods are therefore incredibly informative.
They highlight whose stated risk tolerance was unrealistic, where expectations were poorly set, and which behavioural biases dominate each client’s decisions.
Used well, these episodes become teaching moments: to revisit the plan, re‑anchor clients on their goals and time frames, and reinforce disciplined investing.
In this way, market volatility becomes not only a test of client behaviour, but also a powerful tool for building more resilient, better‑educated investors.
Market performance is never going to be a straight line so try stick to your long-term plan and talk to a financial planner to make sure that when the markets stabilize, your funds are still positioned to get the most out of the bull run.
• Blueprint Finance Brokers owner Scott Roebert has been a financial planner for 25 years, specialising in bespoke investments and retirement planning. You can find him on Facebook
