There is a particular kind of discomfort that comes with watching markets move and not knowing whether to act. You check your super balance. You read the headlines. You wonder if everyone else knows something you don’t. And somewhere in the back of your mind, a voice says: Maybe I should do something.
That feeling is completely natural. Historically, it is also one of the most expensive things an investor can act on.
2025 was a year that tested that instinct more than once. Markets pushed higher through the first quarter, then came the tariff announcements, the volatility, the sharp sell-off that had commentators reaching for crisis language. Then, quietly, markets recovered. Anyone who stayed the course finished the year well ahead. Anyone who moved to cash at the bottom of that dip locked in their losses and missed the rebound.
It is the same story every time. The circumstances change. The emotional pull doesn’t.
The cost of leaving at the wrong moment
Jono Elliot, Managing Director at Collins SBA, has been watching this pattern play out across market cycles for a long time. He puts it plainly.
“Part of our mission as advisers is to help people make smart decisions,” he says. “But it’s equally true that we help people stop scoring ‘own goals’ and destroying their wealth through decisions based on emotions, in particular fear.”
The data behind that statement is difficult to argue with. Vanguard’s research, sourced from Morningstar, tracked what would have happened to a $100,000 investment in a balanced index fund from December 2002 through to the end of 2025. An investor who stayed fully invested through every shock, the GFC, Covid, the bond sell-off, and the tariff volatility of 2025, finished with $464,060.
The contrast with investors who moved to cash at each of those low points tells a confronting story. Switching to cash during the GFC and not returning produced the worst outcome by far. But even the more recent examples show meaningful long-term damage from a decision that felt, in the moment, like the sensible thing to do.
“When disruption and uncertainty are at their peak, markets are typically also at their lowest,” Jono says. “That’s when people lose their nerve. It’s understandable. But acting on that fear is almost always the wrong call, and the evidence is very clear on that.”
Why emotions are such a poor guide
The problem is not that investors are irrational. It is that the emotional response to market volatility is entirely rational in the short term. Selling when things fall feels like limiting your losses. Sitting in cash while headlines are dark feels like safety. The discomfort of watching a portfolio drop is real, and the relief of stepping away from it is real too.
What is harder to feel in that moment is the cost of missing the recovery. Markets tend to rebound sharply and quickly, often before the news cycle has caught up. By the time things feel safe enough to re-enter, a significant portion of the gains are already gone.
This is why Jono frames the role of an adviser not just as someone who builds a plan, but as an objective sounding board when emotions are loudest.
“It’s a hard thing to ignore,” he says. “But when clients are advised, they have someone to actually talk to in those moments. Someone who can separate what the news is saying from what is actually happening in their portfolio.”
That calm, considered perspective is most valuable precisely when it is hardest to maintain.
What 2026 is likely to look like
One more thing worth understanding as we move into 2026: a strong year in markets tends to be followed by a more modest one. That is not pessimism; it is simply how market cycles work.
2025 delivered strong returns across most asset classes. Australian small caps outperformed large caps for the first time since 2020. Global equities posted solid gains despite the volatility mid-year. Those returns are good news. They are also, as Jono notes, a reason to reset expectations rather than assume the same result is coming again.
“Valuations are starting to look stretched,” he says. “It’s difficult to see where the clear value is in any asset class right now, because they all performed strongly. 2026 probably won’t be as strong as 2025, and that’s something we try to communicate with our clients early, just to set realistic expectations.”
That is not a reason to move out of markets. It is a reason to go into the year with clear eyes, a well-structured portfolio, and someone in your corner who can help you stay the course when the next shock arrives. And there will be a next shock. There always is.
The conversation worth having
If you read our recent piece on the US-Iran conflict and its potential impact on Australian businesses [LINK], you will have seen this theme from a different angle. Geopolitical events create noise. That noise creates the urge to act. The discipline is in knowing the difference between a situation that genuinely requires a response and one that simply requires patience.
If you are a Collins SBA financial planning client and you have been feeling uncertain about your portfolio, your adviser is the right first call. That is exactly what they are there for.
If you do not currently have a financial adviser and moments like 2025 made you wonder whether you should, that conversation starts with a simple phone call. You can reach our team on 1300 264 722, or get in touch through our website. For clarity’s sake, and for your confidence, it is worth having.
This article contains general information only and does not constitute financial advice. Please speak with a qualified adviser to discuss your individual circumstances.
