Geopolitical tensions often unsettle investors. Headlines about conflict, inflation, or an economic slowdown can cause market volatility and, with it, portfolio volatility.
Financial guru Dave Ramsey said on his show that reacting emotionally to these headlines can be one of the worst investing mistakes someone can make.
In a recent episode of The Ramsey Show, Ramsey addressed investor concerns over tensions with Iran. He advises investors to turn off the news and stick to your long-term plan.
“If you feel scared every time you watch the news, stop watching the news,” Ramsey said. “Turn off the TV…you’re not supposed to change anything.”
Ramsey believes that market declines triggered by geopolitical events are usually temporary and rarely justify abandoning long-term investment strategies.
Ramsey pointed to the market crash during the COVID-19 pandemic as an example.
At the beginning of 2020, the global economy came to a halt and the stock market plummeted, but the market rebounded quickly.
“Fifty-seven days later, it’s back to where it started,” Ramsay said on his show(1).
History shows that such rebounds are not uncommon. According to Morningstar research, the stock market has experienced numerous crashes over the past 150 years, only to always recover and eventually reach new highs(2).
Morningstar’s long-term analysis finds that even after severe recessions like the 1929 Wall Street Crash, the S&P 500 (or its predecessors) eventually rebounds, although it takes years.
Even a prolonged period of downturn—dubbed the “lost decade” by investors—from 2000 to 2009 eventually led to a recovery and the market surpassed its previous highs.
The 2000s saw the dot-com bubble burst in 2000-2001 and the financial crisis of 2008, and also coincided with the United States’ involvement in conflicts in the Middle East, which wreaked havoc on global energy markets. The prospect of a repeat is understandably unsettling to Millennials and middle-aged adults who remember that time, including one parent of a college kid who called in to watch Ramsey’s show.
Getting through this period required investors’ patience and risk tolerance, but they were ultimately rewarded. After the dot-com bubble burst, the market rebounded, but before it reached its previous highs, the 2007-2009 crash knocked it off its feet. Full recovery did not occur until May 2013—more than 12 years after the initial depression(2).
These recoveries are one reason why investors shouldn’t panic when the market falls.
Learn more: 5 important financial moves you need to make after saving $50,000
Read more: Young millionaires are ditching stocks. Why older Americans should take note
Selling investments during a market decline may seem like a way to limit losses. In fact, experts say it often locks in those losses.
Research from Morgan Stanley shows how damaging this behavior can be over time. Investors who stayed fully invested from 1980 to early 2025 had an average annual return of about 12%. But those who sold during the downturn and waited for signs of recovery before reinvesting saw annual returns closer to 10%.
That difference of two percentage points may sound small, but over decades it can mean a very different outcome. In the Morgan Stanley example, a steady investor who contributed $5,000 per year would receive approximately $6.1 million, while an investor who repeatedly moves in and out of the market would receive approximately $3.6 million(3).
Motley Fool analysts say the problem is simple: Investors who panic sell during downturns often miss the market’s strongest recovery days (4).
These rallies can happen quickly—sometimes even before the crisis that triggered the selloff is over.
Even experienced investors can find it difficult to see their portfolios decline during volatile times. Geopolitical crises, rising interest rates, or economic uncertainty can all increase anxiety.
But reactions to these concerns can lead to classic investing mistakes: panic selling, a shift to cash, and a failure to reinvest when the market recovers.
These behaviors are especially dangerous for long-term investors saving for retirement, because missing out on even a short-term market recovery can significantly reduce long-term returns.
Related: Why gold may be your best bet in an uncertain economy
The lessons from decades of market history are clear: Volatility is to be expected, but abandoning a long-term strategy can be costly.
It’s best not to react to the daily headlines and instead stick to a financial plan based on your personal goals, risk tolerance, and time horizon.
For investors who are years away from retirement, an economic downturn may even create opportunities to purchase assets at lower prices and benefit from future recoveries.
For those approaching retirement, a more conservative portfolio may make sense—but such allocations should be based on long-term planning rather than reacting to current events.
Ramsey’s core message is simple: Market volatility is part of the investing process, and emotional reactions can do more harm than good.
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(1) Ramsay Show Highlights; (2) Morningstar; (3) Morgan Stanley; (4) Miscellaneous Fools
This article provides information only and should not be considered advice. It is provided without any warranty of any kind.
