When the Headlines Say “Bubble”: A Pause Practice for Volatile Markets
A couple weeks ago, we looked at what the dot-com crash teaches us about the math of big losses and why recovering from them takes so much more than you'd expect. This week, let's talk about something just as important: what to do in the moment, when the headlines get loud and your gut tells you to act.
And lately, the headlines have been loud.
What's been in the news
Over the past few weeks, technology stocks, especially companies tied to artificial intelligence, have had some sharp swings. Part of the conversation has been about how long the heavy spending on AI infrastructure can last and how it's being paid for. Interest rates and bond yields, which affect the cost of borrowing, have been part of that discussion too. Layered on top of it all, the word “bubble” keeps showing up in commentary.
Here's the honest truth: no one knows how this chapter will end, and I'm not going to pretend to. Reasonable, well-informed people disagree. Some see a transformational technology that is still early. Others worry that prices have gotten ahead of reality. It's even possible that both things are partly true, which is one of the things the dot-com era reminds us. The internet really did change the world, and many prices in that period still turned out to be disconnected from business results.
What I can tell you is that it's a perfect moment to talk about how we react to uncertainty, because that part is something you can control.
What your brain does with a “bubble” headline
A few mental shortcuts tend to show up whenever markets get unsettled:
- Loss aversion. In their 1979 work on prospect theory, psychologists Daniel Kahneman and Amos Tversky showed that people tend to feel the sting of a loss more strongly than the pleasure of an equal gain. A dip in your account can feel urgent, even when your goals haven't changed.
- Recency bias. We give the most weight to what just happened. After a few rough days, it can feel like rough days are the new normal. After a long run of strong ones, it can feel like the good times will never end.
- Herd behavior and FOMO. When everyone seems to be buying, it's tempting to join in. When everyone seems to be selling, it's tempting to follow. A powerful story, like “this changes everything” or “this is the next crash,” can pull us in either direction.
- Action bias. When we feel uncertain, doing something feels better than doing nothing, even when doing nothing is the wiser choice.
None of this means you're a bad investor. It means you're a person with a brain that evolved to react quickly to threats. The trick is to give yourself a little space between the feeling and the decision.
A simple pause practice
The next time a headline makes you want to make a financial move, try this:
- Name the feeling. Are you anxious? Excited? Worried about missing out? Putting a label on it can take some of its power away.
- Build in a cooling-off period. Give yourself a day or two before acting. Very few financial decisions are true emergencies.
- Return to your plan. Look at your goals, your timeline, and the decisions you made when things felt calm.
- Ask what changed in your life. Has your income, health, family, or timeline changed? Or just the headlines?
- Talk to someone. A trusted advisor or partner can help you see what your emotions may be hiding.
Three questions worth asking in a “bubble” conversation
- Do I know what I actually own? Many portfolios, including diversified funds, can have meaningful exposure to a single theme or sector without the owner realizing it. It's worth knowing how much of your money is tied to one story, so that no single headline gets to decide your future.
- Does my money match my timeline? Money you'll need in the next few years has a different job than money you won't touch for decades. Matching each to the right kind of investment is one of the most powerful things a plan does.
- Am I reacting to my plan or to the news? If a change makes sense because your life or goals have shifted, that's planning. If it's because of a headline, that's worth pausing on.
How a plan helps in every phase
In Accumulation, a plan keeps you contributing steadily and diversified, so a rough stretch is part of the journey rather than the end of it.
In Income & Preservation, a plan helps make sure the money you'll need soon is set aside, so you're not forced to sell investments during a decline.
In Legacy Planning, a plan keeps your bigger purpose in view: what you want your money to do, and for whom, long after any single market cycle.
This is where behavioral finance earns its keep. A plan made in a calm moment is a promise to your future self. Having an advisor who understands the psychology of money can help you spot your own tendencies before the stress hits, agree on guardrails in advance, and keep that promise when it gets hard.
Markets will keep making headlines. Your plan is what keeps you steady while they do.
Feeling unsettled by the news and want to talk through your plan?
Wondering If You're on the Right Track?
You don't have to figure it out alone. Schedule a complimentary conversation and get clarity on your next steps.
