Investing and current affairs: when should you adjust your portfolio?

Ralph: “Maybe we should start with two fundamental questions. First of all, why did you start investing in the first place? Quite simply because you want to use your spare money to make more money. Second: what exactly is investing about? I think that goes back to the principle that we as a society are always striving to improve ourselves. That creates wealth and value, and as an investor you want to benefit from that.

So investing is based on the belief that our society creates value in the long term. If you then look at wars and other events causing fluctuations, these tend to cause long-term dips on balance. But you need to have faith that the stock market will bounce back – just give it time to do its work. Even after a world war, in the most extreme case, the market will recover and reach new highs.”

“That depends on what type of investor you are. Do you like tracking your investments closely every week? And do you want to worry about elections, interest rates and so on? Or do you only want to focus on your total returns around the time of retirement? It depends on you, your investment goal and your investment horizon.”

“Wars often have a brief impact on stock markets. But as long as it’s not the global powers facing off, you only have to deal with some short-term pain. Energy is a sensitive factor, though; you can really feel that if you’re a short-term investor. Energy shortages can trigger inflation, potentially causing central banks to tighten their interest rate policy, which in turn affects liquidity.

That brings us to the single biggest factor that can create chaos in the market: liquidity. We saw this during the banking crisis and Covid-19 pandemic. During lockdown, shops had to shut while still incurring their usual costs. That caused a liquidity problem, which created real panic and stock markets crashed as a result.”

“You don’t need to check it every day, but you do need to know what’s going on from week to week. In other words, you don’t need to know the stock market’s value at any given moment, but you do need to know how financial markets work and what impact macroeconomic or company performances can have on your portfolio. But I think if it’s something you’re interested in, you’ll check the markets automatically and so you’ll be tracking your portfolio anyway.”

“I follow the market closely every day and track about 30 indicators every morning. These have nothing to do with current affairs, but they give me an idea of the underlying dynamics of the market. Sometimes there’s one that gives you a sign of what’s to come, and other times it’s a cluster of indicators. If the market is very enthusiastic but you can already see that certain indicators are taking a turn for the worse, you know it’s time to start reducing some risk.”

“In the short term, you should mainly look at how risk is spread across your portfolio. That’s what you need to keep your eye on. If your investments are managed, a professional does that for you.

What’s more, you should only change tack if something changes structurally. Typically, as an investor, you would have a long-term vision of a particular sector or company. But a major change to the senior management of a company or government interference in a market, for example, should be a time to contemplate things. 

In 2020, the IPO of Ant Group, Alibaba’s financial subsidiary, fell through because the Chinese government wanted more control over tech companies: that’s an example of a structural change. China is massive and will only continue to grow, but government interference reduces your efficiency. And that means lower growth forecasts, so you have to adjust your investment strategy accordingly. That’s why it was interesting that President Xi met publicly with the bosses of the tech companies in early 2025 and seemed to give them more freedom.”

“Investing is only something you do in advance. If you’re positive about the outlook of the stock market, you have to position yourself accordingly beforehand. When things change, you’re already too late and you just have to ride it out. Acting spontaneously, in a state of panic or because of FOMO is the worst thing you can do.

To give you an example, the days when central banks revise their interest rates are the most volatile on the stock market. So if there’s news about an interest rate change: do nothing.

If you’re constantly buying and selling, you’ll lose out on returns. If you miss out on the best day of the year, you won’t get the long-term return you expect. But often, the best day is not very far off the worst one. That’s why you should always stay invested. You can always adjust your risk slightly here and there.”

“As the oracle Warren Buffett himself says: it’s wise for investors ‘to be fearful when others are greedy and to be greedy only when others are fearful’. As an investor, you need to switch your emotions off and do the exact opposite of what they’re telling you. That is very tricky. When everyone’s excited about the market, for instance, you don’t join in. Or when there’s a dip, which drops further and further every day, you don’t move a muscle. You really do need nerves of steel.

If you can’t control your emotions at times of stress, I strongly advise you not to manage your own investments, even if you enjoy it and understand the market.”

“Your long-term strategy is essentially: make returns within a certain horizon. That shouldn’t change. Even over the long term, you still shouldn’t underestimate the return-on-return effect. For example, the AEX ‘only’ beat its 2000 record in 2021. You might think: that took a while. But as an investor, you would have already made a 100% dividend return. That’s about half your expected long-term return. It just goes to show, let time do its thing, and things will work out. That’s the most important lesson.”

Opinions were valid at the time of the interview and may change over time. Investing involves risk. You could lose all or part of your initial investment.