The Psychology of Holding: Why Doing Nothing Can Be the Smartest Move

There’s a peculiar kind of tension that comes with doing nothing—especially when it comes to your money.

You check your investment app and see red. The market dips. The headlines scream. Your instincts lean toward action: Should I sell? Rebalance? Rotate sectors? Pull it all and sit in cash until things settle down?

But what if the most strategic move is… to hold?

It’s counterintuitive in a world obsessed with hustle, headlines, and hyper-efficiency. But in the context of long-term investing and decision-making, doing nothing is not the same as doing nothing. It’s often a form of deliberate restraint—a choice rooted in clarity, discipline, and a bigger-picture mindset.

Holding, especially during volatility or uncertainty, isn’t passive. It’s often the harder choice. And it’s a move backed by behavioral psychology, historical market data, and the practices of some of the most successful investors of our time.

Why We’re Wired Not to Hold

Let’s start with the uncomfortable truth: human brains are not naturally built for long-term investing. We evolved to respond to immediate threats, to seek patterns, to do something when things feel off. And markets, with their ups, downs, and 24/7 access, are full of triggers.

This is where behavioral finance comes in—a field that blends psychology with economics to explain why people often act irrationally with money. Two concepts matter especially when we talk about holding:

• Loss aversion: We tend to feel the pain of loss more intensely than the pleasure of gain. According to a famous study by Kahneman and Tversky, losses are psychologically about twice as powerful as gains. This can lead to panic selling, even if the loss is only on paper.

• Action bias: We’re conditioned to believe that doing something is better than doing nothing. In investing, this bias often shows up during market dips—when holding feels like stagnation, and taking action feels like control.

But here’s the thing: control doesn’t equal clarity. And reacting emotionally often leads to short-term moves that undermine long-term success.

What History Says About Holding

Markets rise. Markets fall. Then they rise again.

If you zoom out—really zoom out—the data tells a remarkably consistent story: long-term investors who stay in the market tend to outperform those who try to time it.

JPMorgan Asset Management found that the market’s biggest comebacks often follow its toughest days. Over the past 20 years, seven of the 10 best trading days happened within two weeks of the 10 worst. Case in point: in March 2020, right as the pandemic hit, the market plunged on March 12—then bounced back with its second-strongest day of the year on March 13.

Here’s the twist: many of those “best days” happened during or immediately after some of the worst days. You don’t get the rebound without weathering the dip.

Holding isn’t just about endurance—it’s about not missing out on the recovery.

Holding ≠ Ignoring. It’s an Active Strategy.

Let’s clarify something: holding doesn’t mean turning off your brain or ignoring your investments for decades. It means resisting impulsive moves while continuing to monitor, rebalance periodically, and adjust based on meaningful life changes—not noise.

Good holding is intentional holding. It’s grounded in:

• A long-term investment strategy
• Realistic expectations about volatility
• Confidence in asset allocation and diversification
• A clear understanding of your time horizon and goals

It may also mean reviewing your portfolio once a quarter instead of once a day. It could mean setting up guardrails (like automatic contributions) to remove emotion from your choices.

The key difference? You’re still engaged—but you’re not reactive.

When Holding Is Hard, Here’s What Helps

Let’s acknowledge something: it’s easy to say “just hold.” But when the market is down 15%, your portfolio is bleeding, and social media is in panic mode, holding can feel like self-sabotage.

Here’s what makes it easier:

1. Have a Written Investment Policy Statement (IPS)

This is your personal constitution. It outlines your goals, risk tolerance, time horizon, and what you’ll do in different market conditions. When emotions run high, your IPS brings you back to logic.

2. Name Your Investments’ Purpose

Tying money to future goals creates emotional distance. You’re not watching your net worth fluctuate—you’re funding your retirement, your child’s college education, your future home.

3. Reframe the Dip

Instead of seeing down markets as danger zones, train yourself to view them as discounts. If you’re still contributing, you’re buying in at a lower cost basis.

4. Automate Contributions and Rebalancing

This removes the temptation to tinker and helps you stick to your plan even when emotions flare.

5. Check Less Often

Consider this your permission to step back. Daily checking fuels stress. A 2020 Vanguard study found that investors who checked their portfolios less frequently reported greater satisfaction and lower anxiety—with no drop in long-term performance.

Holding Isn’t Just for Markets—It’s a Broader Life Skill

The psychology of holding applies far beyond investing. In fact, learning to pause and not act can strengthen decision-making in nearly every area of life.

• In business, holding off on a flashy but unfocused opportunity can protect long-term strategy.
• In relationships, not reacting to a heated moment can preserve communication and trust.
• In career growth, staying the course during a tough season can lead to breakthroughs that a premature pivot might miss.

Patience is not indecision. It’s disciplined awareness. Holding is not failure to act—it’s choosing not to overact.

But… When Should You Act?

Holding doesn’t mean you never change course. There are valid reasons to adjust your portfolio or strategy:

• A major life change (marriage, kids, retirement)
• A shift in time horizon or risk tolerance
• A portfolio that’s out of balance due to long-term growth
• New tax considerations or estate planning updates

The difference is that these adjustments are proactive and planned—not reactive and emotional.

If you’re unsure, talk with a fee-only financial advisor who can help you evaluate changes against your long-term goals.

Wealth Insight

Resisting the urge to act in moments of uncertainty is a financial skill that compounds over time—often producing more value than your best trades.

Sometimes, Stillness Is Strategy

We live in a world that equates movement with progress. And sometimes, that’s true. But in investing—and in many parts of life—the smartest move is learning when not to move.

Holding isn’t about doing nothing. It’s about doing the right thing at the right time—for the right reasons. It’s rooted in clarity, backed by data, and strengthened by discipline.

So the next time your instincts scream for action during a volatile week, a market dip, or a tough life moment, pause. Revisit your plan. Reconnect to your goals. Remind yourself that the smartest investors aren’t the busiest—they’re the most consistent.

Hold with purpose. And let time do what it does best.