HUNTSVILLE, Ala. (WAFF) – Markets react quickly and drastically to geopolitical events, but investors should avoid overreacting to headlines when managing their portfolios, according to financial expert Jay McGowan from The Welch Group.

McGowan said investors face constant geopolitical developments, from operations in Venezuela to tariffs, that can trigger strong market reactions that are usually short-lived.

“The question you have to ask yourself, in these times is how do I react without overreacting when it comes to my investment portfolio,” McGowan said. “Because the headlines, will give you some kind of emotion, but what do you need to do for the best interest of your portfolio long term?”

Common investing mistakes

McGowan identified panic selling and buying as the most common mistakes investors make during uncertain times.

“A lot of times people will go to cash. They will, you know, they’ll get scared and pull all their money out of a really good investment just because of a piece of news that’s happening in the short term,” he said.

On the opposite end, some investors often rush into positions based on news events. McGowan cited recent Venezuela developments as an example, where oil companies and servicing firms spiked after news broke but returned to previous levels within days.

“A lot of people rush to get into those positions. And the key is those may be great investments long term, but I don’t think making the decision to get into those companies based on those headlines is necessarily in your long-term best interest,” he said.

Recommended investment strategy

McGowan recommended maintaining a consistent, diversified portfolio focused on quality stocks rather than speculation.

“Quality over speculation, in my opinion, is going to work every time,” he said. “What history tells us is that a diversified portfolio of really quality stocks where you have looked at the fundamentals of these companies and they’re built for the good times and the bad, that can really shield you from a lot of the volatility.”

He said geopolitical events create more volatility than long-term portfolio impact, emphasizing the importance of investing in companies positioned to grow, generate goods and services, make a profit, and share those profits with stockholders.

McGowan advised using market volatility strategically, such as selling high-performing positions during spikes and reinvesting in quality companies that may be underperforming temporarily.

“Discipline outperforms emotion pretty much every time,” he said. “Slow and steady, consistent over time is what we preach to our clients. It’s how we invest our own money.”

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