Three weeks later, in mid-March, sharemarkets were 10% lower. Was she a prophet? Maybe. Or did we just endure a normal “dip”, like those that happen roughly every two years?
Since 1960, we’ve seen almost 34 market “corrections” just like this one.
You should take responsibility for the decisions you make about money. These decisions come with massive consequences, so I’d start by asking you a question. Should you trust your gut on money decisions?
Ask yourself three other questions first: do I have a mental bias? Are commercial interests influencing my financial decisions? And what’s the risk and reward with this decision?
Do I have a mental bias?
We might look back at March 2025 and call it “The Trump tariff tantrum” – a noisy blip that shook nerves but faded away with time. On the other hand, it could be the start of something much bigger, ushering in worldwide chaos.
Trump is either making everything great again, or he’s the Antichrist. I’d be reluctant to blame or give credit to any politician.
Humans like you and me often try to force complex systems or events into simple stories.
It requires less mental effort than considering all the key facts.
A 2018 study in the Journal of Consumer Research found that negative perceptions of a CEO reduce consumer trust in a brand by up to 30% – this is called the “horn effect”. Our impression about a person influences our feelings and decisions about unrelated things associated with them.
What’s the solution? The “horn effect” dissolves when our financial decisions are focused on a longer timeframe. Technology, demographics and a shifting world order affect investment returns far more than a single President or Prime Minister does.
Are commercial interests influencing my financial decisions?
This dirty secret should come with a mandatory disclaimer: the “industry” wants you to stay invested and keep investing no matter the circumstances.
Banks profit from your debt, insurance firms benefit from your premiums, and investment advisers? We seldom get medals for the wins, but we sure catch hell for the losses. We’re told to buy the dip, upgrade the home, stay invested and, above all, earn more money.
Legal fees, accounting bills, brokerage, commissions and compliance fees can all be justified because, over the long term, the market always rises (until it doesn’t).
Financial incentives don’t have to be obvious. Take the real estate agent who whispers the right numbers in my clients’ ear, the economist who tries to engage with new bank customers, and even me, as I write this article or talk on a podcast.
Think about all the “free” information out there to help you be a better investor. Actually, much of it is written by “finfluencers”. Regulators worldwide are trying to crack down on people promoting financial products that aren’t regulated.
Even legitimate mentions of financial products such as KiwiSaver or index funds can draw the wrong people into – or out of – investments at the worst possible times.
So, list all the people involved with your financial decision. Do they stand to gain or lose anything from it? Pay for independent legal, tax and financial advice if you can.
What could I win, and what could I lose?
Consider the stakes. When we fixate on the small stuff, we stumble on the big things. My client was ready to sell her rental property at a $250,000 loss, pay $50,000 in real-estate fees and liquidate her investments, all because one economist’s presentation stoked her pre-existing fears about Trump.
That’s a high-stakes move driven by bias, not maths – she risked derailing her whole financial future.
Meanwhile, I’ve seen people with $10,000 agonise for weeks over picking the “perfect” index fund.
The irony? Once you’re invested, inaction and sticking with “good enough” often generates a better long-term result.
If you haven’t got much to invest, don’t waste hours hunting for the best fund and don’t drive across town to save 25c on fuel, either. Use your time and mental energy elsewhere.
But when the stakes are big – buying a home, selling a rental or sinking all your savings into one investment, get your potential wins or losses looked over by advisers with no horse in the race.
Cognitive biases and external influencers can make us trust our gut more than we should.
Checklist to ask yourself:
- What’s at stake with this decision?
- Am I picking up pennies in front of a steamroller?
- Or am I gambling, literally, with house money?
You can be derailed by a Trump bias, commercial interests and by not measuring their impact on the money we have at stake. When you’re aiming for wealth, keep your focus on the longer-term realities you can see, not the short-term noise.
– Darcy Ungaro is an authorised financial adviser and the host of the NZ Everyday Investor podcast.
