Staying steady in Shaky markets: Practical tips for U.S. investors abroad - opinion

Investing can feel like a rollercoaster ride. One moment, your portfolio climbs; the next, it dips into the red. For U.S. investors living in Israel, the experience can become even more stressful. The distance from U.S. markets, paired with market volatility, adds complexity. However, by taking careful steps, you can stay calm and make smart choices, even when the markets feel unpredictable.

Small Steps, Big Impact

When markets shift, many feel compelled to make big changes; but small, strategic moves often provide a more balanced approach. A client of mine, a U.S. investor living in Haifa, grew nervous when tech stocks plummeted. Instead of panicking and selling everything, we carefully reviewed the situation. Together, we trimmed one underperforming stock and reallocated the funds into a diversified portfolio. This approach didn’t just stabilize their portfolio; it eased their anxiety. Still, no action comes without risk, and results always depend on market conditions.

As Charles Darwin observed, “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.” Darwin’s insight holds true in the world of investing. The ability to adapt—not with impulsive reactions, but with thoughtful adjustments—helps investors manage risk during turbulent times.

Mastering Your Emotions During Market Volatility

Market downturns can provoke emotional responses, especially fear. Behavioral finance teaches us that people fear losing money more than they celebrate gains—this is known as loss aversion. This emotional bias often pushes people to make hasty decisions, like selling investments during a downturn, even when it doesn’t align with their long-term plans.

One client in Tel Aviv experienced this firsthand. He watched U.S. healthcare stocks fall sharply and felt tempted to sell everything. After discussing the situation, we recognized that his reaction stemmed more from fear than from sound financial reasoning. We decided to hold onto the investments, acknowledging the inherent risks of staying the course, without any illusions of guaranteed future success.

Peter Lynch, one of the most successful mutual fund managers in history, reminds us, “The key to making money in stocks is not to get scared out of them.” Lynch’s wisdom underscores the importance of maintaining a long-term perspective. That said, while staying invested has worked for some, market conditions can change, and different strategies may suit different individuals depending on their risk tolerance and goals.

Stay in Touch: The Power of Communication

In uncertain markets, maintaining open communication with your financial advisor can provide clarity and reassurance. Your advisors don’t just crunch numbers; they help you understand how external factors affect your strategy and assess associated risks. This is particularly crucial for U.S. investors living in Israel, where cross-border tax laws and market differences complicate financial planning.

For instance, I work with a family in Jerusalem who regularly checks in with me. We don’t just discuss their portfolio—we review evolving personal goals like saving for their children’s weddings and planning for retirement. This consistent communication ensures their financial plan remains aligned with their objectives, though it doesn’t eliminate the uncertainties and risks tied to investing.

By keeping the dialogue open, you can ensure your financial plan reflects both your long-term goals and your current reality. But, of course, no amount of communication can remove the inherent uncertainty that comes with investing.

Investments Reflect Your Goals, Not Just Numbers

It’s easy to get caught up in day-to-day market fluctuations, but investing goes far beyond the numbers on your screen. Your portfolio represents your future—whether it’s retirement, a home, or your children’s education. During unsteady times, remind yourself of the long-term objectives that drive your investment choices.

Ground your investment decisions in your personal goals and risk tolerance. Reassessing your goals periodically helps you stay on course. However, a balanced perspective that acknowledges both the opportunities and risks involved is key to long-term success.

How to Keep Your Finances Resilient in Uncertain Markets

How do you stay financially strong when markets seem unpredictable? Remain calm, make thoughtful adjustments, and keep communication with your advisor open. While no strategy can shield you from all risks, focusing on long-term goals and avoiding emotionally driven decisions can help you weather market volatility.

If the stress of market fluctuations is weighing on you, visit Stress Less: Transform Your Investment Approach Today. There you will discover practical strategies for maintaining perspective during uncertain times. You’ll learn ways to balance your financial goals with market unpredictability, equipping you with tools to handle volatility with confidence. 

Douglas Goldstein, CFP® is the director of Profile Investment Services, Ltd. www.Profile-Financial.com. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of this website, Portfolio Resources Group, Inc. or its affiliates. Neither Profile nor Portfolio Resources Group, Inc. or its affiliates, provide tax or legal advice. Nothing in this article is intended to be investment, tax, or legal advice. Information in this article is gathered from sources considered reliable, but we cannot guarantee their accuracy. Past performance is no guarantee of future returns.