Back in the early 1980s, when I was in grade school, my best friend’s way-too-cool older brother introduced me to the by Canadian progressive rock band Rush. I’d never hear anything like it. Not only was it incredible that just three guys could make music like that, but their lyrics had such deep meaning. Take “Freewill”, the second track on the 1980 album Permanent Waves. The chorus of the song contains the line “If you choose not to decide, you still have made a choice”. This is a very interesting paradox as most people associate choices with actions. But, interestingly enough, the absence of action is also a choice.
This line from the song resonates strongly in the context of long-term investing, especially when it comes to avoiding impulsive actions that can disrupt a well-thought-out investment strategy. Long-term investing requires patience and a commitment to a strategy that is designed to grow wealth over time, often by enduring market volatility without reacting to short-term fluctuations. Choosing not to act on every market movement is, in itself, a conscious decision to stay the course, demonstrating trust in the investment’s long-term potential and the investor’s long-term plan. By not reacting impulsively to market noise, an investor makes a choice to prioritize their financial goals and avoid the pitfalls of attempting to time the market, which can lead to buying high and selling low — a pattern that can significantly erode returns.
Impulsive actions in response to market volatility are often driven by fear or excitement, and they can lead investors to deviate from their long-term plans. This choice to “not decide” on every market fluctuation is essentially a form of discipline that can protect an investor from emotional decisions that harm returns. For example, during market downturns, the impulse to sell investments can feel like a solution to avoid further losses, but it often results in locking in those losses (and missing out on the following market increases) instead. By choosing not to make reactive decisions, investors align with a strategy that seeks to capitalize on market recoveries and compound gains over time. In this sense, choosing not to react to every short-term market movement is a deliberate strategy that supports consistent, long-term growth, underscoring the power of patience and restraint in the investing process.
So, when faced with any number of uncertain factors that can create short-term volatility in financial markets, all investors have “Freewill”. They just need the will power to stick to their long-term plan, regardless of what transient events happen to drive market fluctuations in any given day, week, month, or (yes, even) year. Will you make that choice?
The information presented in this blog post is for educational purposes only and should not be construed as individual advice from RTD Financial.