Listed equities (i.e. stocks) are one of my favourite asset classes. They enable investors of all walks of life to own a piece of a company, entitling them to its future cashflows. They can protect your wealth from inflation and can help your money work harder. Transaction costs are low. Potential returns are high. And they’re liquid, meaning you can easily buy and sell them.

That last point is important, because while it means you have readily available access to your equity, it also means the value of your investments will rise and fall in line with market dynamics. This is technically true of all growth investments, but much less impactful on emotions when you can’t see the prices fluctuating in real time.

Sudden drops in the market can be unnerving. Take the recent market volatility following Trump’s tariff announcements on 2 April 2025. Many were quick to sell after experiencing sharp declines in their portfolio values, and subsequently missing out on the relatively quick rebound.

You won’t see investors being as reactive with unlisted assets like property. A key reason for this is that property investors aren’t plagued by the same psychological effects of fluctuating market prices. The price of your property is generally only known when you choose to buy or sell, meaning your decision to sell isn’t being dictated by prices.

So how can equity investors better protect themselves from making irrational, reactive decisions? Having a long-term investment horizon is a great starting place. It also helps to understand the different types of cognitive biases that can plague decision making. And working with a trusted financial adviser can help you stay the course, even when market conditions are challenging.

When your portfolio experiences a sudden drop, generally the most important thing you can do is stay invested and look forward to better days ahead.