The Expensive Itch To Act Now
Peter McGahan
Monday 29th June, 2026.
THERE are few phrases more dangerous in investing (or disinvesting) than “I need to move quickly”.
Markets fall. Do something. A fund has a poor year. Do something. A technology fund sits at the top of the table. Do something quickly before everyone else notices, even though everyone else has clearly already noticed, hence the table.
That itch is one of the most expensive in finance.
Remember my previous comments about Peter Lynch. He ran Fidelity Magellan from 1977 to 1990 and produced an annualised return of 29.2 per cent, one of the great fund management records. That figure is often used to celebrate stock-picking brilliance, which is fair enough. But the more useful lesson is duller and more important: even a superb fund is not enough if the investor cannot sit still, because the average investor in this fund lost money.
Lynch did not build that record by needing to be first into every idea. His philosophy was to understand what he owned, wait for evidence, and let time do the heavy lifting. His point was particularly uncomfortable for impatient investors: you did not have to buy on hope. You could wait for reality. You might pay a bit more after the evidence had appeared, but you were less likely to buy a fantasy with a good story and no numbers behind it and get a rash.
That is the difference between investing and twitching.
Urgency feels clever because it gives us the emotional comfort of action. When markets fall, doing nothing feels negligent. When a fashionable fund has doubled, not buying feels like missing the bus. When a fund you hold has a miserable year, staying with it feels like stubbornness. Yet the data says the investor’s urge to act is often the thing doing the damage.
The lesson appears in UK market timing data. Fidelity’s analysis of the FTSE All-Share, using Refinitiv Datastream, showed that from February 28, 2011, to February 27, 2026, staying fully invested produced an annualised return of 8.11 per cent. Miss the best 10 days its 5.07 per cent. Miss 20 its 2.97 per cent. Miss 40 - its minus 0.64 per cent a year.
The horrible trick is that the best days often arrive when investors feel least like being invested. They come near the bad days, when the news is still miserable, the television expert is still pale, and the WhatsApp group has turned into a small
economic funeral. Selling to “wait until things settle down” sounds calm. In practice, it often means being absent for the entire rebound above.
For fund investors, urgency has three common disguises.
The first is panic switching. A fund falls, the investor or financial adviser decides it is broken, and moves to something that has recently held up better. This is queue hopping. Recency bias tells us that what has just happened is the most important thing. A fund down 15 per cent feels broken. A fund up 30 per cent feels gifted. Neither feeling is evidence. One may simply be a difficult year for that part of the market. The other may be the final warm blast from a very crowded trade.
The second is performance chasing. This is urgency dressed as research. ‘Buy last year’s winner’ is marketed with a chart rising beautifully from bottom left to top right. By the time ordinary money arrives, the easy return may already have gone, moreover they may well be buying into a fund which has spiked from a recent stock surge, ensuring you buy it at its greatest expense.
The third is the belief a portfolio must always be improved. There is a whole industry built on making investors feel their current holding is yesterday’s sandwich. Of course, portfolios need reviewing. Funds change. Managers leave. Costs matter. Risk changes as life changes. But reviewing is not the same as fiddling. The question is not “what can I change?” It is “what has changed enough to justify action?”
That is the Lynch lesson translated into fund selection. Know why the fund is there. Know what would make you sell it. Know what would make you add to it. Then ignore the great majority of noise in between.
You do not need to be first. You need to be right enough, patient enough, and immune to manipulation when the next urgent thing arrives with shiny shoes.
I will be creating a guide to investing, so, if you would like a complimentary copy, please email info@wwfp.net. If you have a financial enquiry, please call 01872 222422.
Peter McGahan is the Chief Executive Officer of Independent Financial Adviser firm, Worldwide Financial Planning. Worldwide Financial Planning is authorised and regulated by the Financial Conduct Authority.
