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Don't Panic: Experts Urge Investors to Resist Emotional Reactions

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  Published in Stocks and Investing on Friday, March 6th 2026 at 8:53 GMT by CNBC
      Locale: UNITED STATES

Friday, March 6th, 2026 - Global markets continue to experience periods of heightened volatility, prompting anxieties among investors of all levels. Amidst this uncertainty, a recurring message from financial experts stresses the paramount importance of not reacting emotionally. Lori Calvasina, Head of Global Investment Strategy at RBC Global Asset Management, recently reiterated this crucial advice, warning that panic-selling during downturns is often the single biggest mistake investors make.

Calvasina's comments, delivered on CNBC's "Squawk Box," resonate deeply with behavioral finance principles. The tendency for investors to make impulsive decisions based on fear and greed is well documented. When market declines occur, the natural instinct for many is to cut losses, believing they can avoid further damage. However, this often leads to 'locking in' losses - selling at a low point, only to potentially miss out on a subsequent recovery. The current market environment, facing a complex interplay of factors like persistent inflation, aggressive interest rate hikes by central banks worldwide, and ongoing geopolitical instability - particularly the escalating tensions in Eastern Europe and the South China Sea - is amplifying this emotional response.

So why is 'doing nothing' sometimes the best strategy? The answer lies in the cyclical nature of markets. Corrections, while unsettling, are a normal part of the investment landscape. Attempting to time the market - predicting exactly when to buy and sell - is notoriously difficult, even for seasoned professionals. More often than not, investors who try to time the market end up underperforming those who maintain a consistent, long-term approach.

Calvasina advocates for a shift in mindset: from short-term speculation to long-term planning. This involves establishing a clear investment plan before market volatility hits, outlining financial goals, risk tolerance, and asset allocation. Once established, the plan should serve as an anchor, guiding investment decisions even during turbulent times. This isn't about ignoring market realities, but rather about avoiding impulsive reactions that derail long-term objectives.

Beyond simply avoiding panic-selling, Calvasina highlights the value of proactive portfolio management. "Rebalancing" is a key component of this. Over time, certain asset classes will outperform others, skewing the initial asset allocation. Rebalancing involves selling some of the overperforming assets and buying more of the underperforming ones, bringing the portfolio back in line with the original plan. This forces investors to "buy low and sell high," a principle often easier said than done when emotions run high.

Furthermore, Calvasina emphasizes the significance of fundamental analysis. In times of uncertainty, focusing on 'quality companies' - those with strong balance sheets and consistent cash flow - is paramount. These companies are better positioned to weather economic storms and continue generating value for shareholders. A strong balance sheet provides a cushion against economic downturns, while healthy cash flow enables investments in growth opportunities and dividend payments. This isn't a new strategy; value investing principles have long championed the importance of focusing on intrinsic value rather than short-term market hype.

The S&P 500's recent decline of over 5% this year serves as a stark reminder of market fragility. While this figure may seem concerning, it's crucial to remember that historical data shows market corrections are relatively frequent. The key is not to be alarmed by these short-term fluctuations, but to view them as potential buying opportunities for long-term investors.

Looking ahead, experts predict continued market volatility. The Federal Reserve's commitment to controlling inflation, coupled with geopolitical risks and the potential for a global economic slowdown, suggests a bumpy ride for investors. However, Calvasina remains optimistic, believing that well-positioned companies will continue to thrive despite the challenges. The lesson remains clear: resist the urge to react emotionally, stick to your long-term plan, and focus on quality. In the long run, disciplined investing is far more likely to deliver positive results than impulsive, fear-driven decisions.