The world has always been unpredictable, but today’s shocks feel sharper, faster, and harder to ignore. From sudden market swings to geopolitical upheavals, investors aren’t occasionally navigating volatility; they’re living in it. In times like these, resilience isn’t about making the perfect call. It’s about mastering your mindset. Because the strongest portfolios don’t just withstand surprises, they’re built for them. When it comes to investing, emotions and mental shortcuts can often steer decisions rather than logic. Behavioural finance, the study of how psychology influences investor behaviour and markets, shows that during turbulent times, fear and bias can overwhelm reason. Understanding these tendencies is crucial because investing in resilience doesn’t start in the market; it starts in the mind.

Here are some common behavioural biases that can trip up investors and how they affect their decisions:

• Overconfidence Bias: This bias occurs when investors overestimate their own abilities, leading to potentially poor investment decisions. The abundance of online information can exacerbate this bias in us, creating an illusion of comprehensive understanding. Investors often believe they can outperform other investors through their own research and/or trying to time the market.

• Anchoring Bias: The first information you receive about an investment is usually the most powerful. This common bias in investor behaviour causes them to place excessive weight on the initial information they get, often leading to faulty investment decisions. The impact of anchoring bias on investment decision making can be particularly problematic during periods of market fluctuations. Investors may cling to outdated reference points, such as a stock’s past performance or previous market trends, rather than adjusting their analysis based on actual/current market conditions. When we have an anchoring bias, we tend to hold investments that have lost value because we have anchored their fair value estimate to the original purchase or market high, rather than to fundamentals.

• Loss Aversion: Loss aversion occurs when investors experience the emotional impact of losing money more intensely than the satisfaction of achieving a similarly sized gain. In investing, loss aversion can lead to the so-called disposition effect when investors sell their “winners” and hang onto their “losers”. Investors do this because they want quick gains. However, when an investment is losing money, many investors would choose to hold onto assets because they want to get back to their initial purchase price and do not want to crystallise the loss by selling the asset. This can lead to inaction that stagnates the growth of their portfolios. It can even lead to greater losses if a deterioration in the fundamentals was the reason for the decline in the asset price.

• Herd Mentality: This occurs when investors make decisions based primarily on group behaviour rather than independent analysis, because they assume that other individuals have already done their research. This psychological factor often manifests through fear of missing out (FOMO), leading market participants to skip crucial steps like due diligence and fundamental analysis.

These behaviours don’t just cause stress; they can derail long-term portfolio growth. But the antidote isn’t just more information or perfect prediction, it’s emotional discipline. Imagine two investors facing the same market drop. One panics and sells off quality assets, then sits in cash for months. The other pauses and goes back to their framework for making investment decisions. After putting their assets through their decision-making framework, and it still holds true, investors can maintain their current position, and there is no need for panic-selling. In some instances, your framework may tell you it is time to exit that asset. However, when you do, you would have done so based on a thorough assessment. The difference isn’t just knowledge; it’s emotional control and discipline. When markets become volatile, it’s tempting to quickly react, for example, selling your stocks when market conditions seem uncertain to maintain a sense of control. But often, the better choice is intentional action. Few demonstrate this better than Warren Buffett. While panic-selling gripped global financial markets in 2008, Warren Buffett wrote op-eds encouraging investors to be “greedy when others are fearful”. He poured billions into companies like Goldman Sachs and General Electric — moves that paid off handsomely as the recovery unfolded. Buffett didn’t rely on perfect timing; he relied on a clear philosophy and the emotional discipline to follow it. That’s the power of staying calm when the world isn’t.

This kind of emotional control, knowing when to pause, reflect, and resist knee-jerk reactions, is often the most valuable skill an investor can develop. So how can you develop it?

• Identify your triggers: Does volatility make you watch your portfolio obsessively and sell down assets? Do headlines push you toward impulsive moves?

• Build pauses into your process: Whether it’s a 24-hour rule before selling or a scheduled portfolio review, slowing down your decisions helps filter emotion from strategy.

• Develop a framework for investment decision making: Having an investment framework helps you to outline your criteria for buying, holding, or selling an asset. A clear structure keeps your choices grounded in logic rather than emotion and keeps you disciplined.

• Remind yourself of your ‘why’: Write down your long-term financial goals and review them during periods of volatility. Clarity helps you to cut through panic.

• Spot the biases in your portfolio: Are your holdings based on fundamentals, or fear of missing out? Are you holding onto stocks simply because they’re familiar, even if their outlook is weakening? Or are you selling a stock with strong fundamentals and growth prospects, just because others are doing so?

Markets don’t reward perfection. They reward persistence and preparation. The investors who thrive aren’t those chasing every market twitch, they’re the ones who understand themselves, trust their long-term investment strategy, and stay the course. While you can’t control headlines or global events, you can control your response. As you look ahead to the rest of 2025, remember that markets will always go through periods of uncertainty and volatility. But the way you handle it can make the difference. Ready to build a resilient strategy that keeps your goals focused no matter the headlines? Email ncbcapinfo@jncb.com or call 876-960-7108 to speak with an NCB Capital Markets Limited advisor about building a strategy that keeps your goals in focus even when markets wobble. The market’s greatest advantage belongs to those who understand their own behaviour and whose investment decisions aren’t driven by the noise.

This article provides general information only, not financial advice. Consider your personal situation and consult a licensed advisor before making decisions. Past performance does not guarantee future results.

Dr Karrian Hepburn Malcolm, Head — Wealth Management, National Commercial Bank Jamaica Limited