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How to Stay Calm When the Market Wobbles Right at the Start of the Year
Key takeaways
- The start of the year tends to be more volatile — this is a normal part of the market cycle, not a signal to act.
- Short-term swings are noise; portfolio performance is reflected over a horizon of years, not weeks.
- Psychological resilience is more important for long-term results than choosing the right ETF.
- Regular investing (DCA) and a clear plan give you an anchor when the market wobbles.
- Checking the portfolio less than once a month demonstrably reduces the number of bad decisions.
If your portfolio is swinging up and down right at the start of the year, it does not mean that something exceptional is happening — and it certainly does not mean it is time to act. Volatility is a natural part of markets and the start of the year is historically closer to it.
Why the start of the year is more volatile
January and February typically bring heightened activity: institutional investors rebalance portfolios after year-end, fourth-quarter company results are published, and markets adjust expectations. The result is more pronounced daily moves than in the calmer third quarter. That is not a problem — it is simply market mechanics.
What portfolio fluctuation triggers in the brain
The brain perceives a loss roughly twice as intensely as an equal gain (prospect theory, Kahneman). When the portfolio fluctuates, the emotional response is stronger than the real situation warrants. This effect is amplified by daily monitoring — which is why I recommend reducing the check-in frequency to at most once a month.
Anchor 1: have a plan before the volatility
Investors who defined their strategy in advance — allocation, horizon, and what to do during a downturn — respond to volatility more calmly. A plan works as an emotional anchor. See strategies for volatile markets.
Anchor 2: automation
A regular standing order to buy an ETF prevents decision paralysis during fluctuations. The investment goes through automatically — and you do not need to convince yourself each month that it makes sense. See standing order for ETFs.
What not to do
- Do not wait for a "calmer market" before making your first purchase — a calm market does not exist
- Do not compare your portfolio's performance with someone else's on social media
- Do not confuse fluctuation (normal) with permanent loss (a different matter)
- Do not reset allocation every few weeks based on market mood
FAQ
Is it normal for a portfolio to fluctuate in January?
Yes. The start of the year is historically more volatile due to institutional rebalancing and the release of company results. Short-term swings are noise — performance is reflected over a horizon of years, not weeks.
How do you stay calm during market fluctuations?
The key is having a plan put together before the volatility. Define allocation, horizon, and what you will do during a downturn. The plan works as an emotional anchor that prevents hasty decisions.
Should I check the portfolio every day?
No. Research shows that investors who check the portfolio less than once a month make fewer bad decisions. Daily monitoring activates emotional responses to noise rather than to signal.
What if the fluctuation has turned into a real downturn?
Even then the basic rules apply: check the reserve, allocation, and horizon. If they are in order, the best action is inaction or buying more — not selling. More in the article on what to do during a 20–40% downturn.