Despite the fact politicians and central bankers are stubbornly spell-bound by outdated ideas of Keynesian economics, the reality is, markets (like the weather), can’t be controlled. All we can do is take the gains (and nice days) when they show up, and hang on tight when they don’t. Last week was a reminder how, as everyday investors chasing ‘above average’ don’t receive consistent results. Volatility is not always a sign somethings wrong. So, if nothing’s fundamentally changed, there should be no need to panic and change how you go about things.

In a typical year, it’s not unusual to see at least a 10% ‘wobble’ in the value in a typical diversified portfolio. For the concentrated investor however, it’s not unusual to see much bigger moves. Volatility (sudden price changes) is not risk if you don’t capitulate and sell during peak fear. Concentrated portfolios (with less variety and quantity of investments) are FAR more likely to make some investors nervous, especially if they’re not prepared. So, if last week made you question your investment strategy, the real question isn’t, ‘what went wrong with markets‘?, it’s ‘can you handle the jandel of a high-return investment strategy?’.

But what did go wrong with markets?

Last week was a shocker for investors exposed to AI and anything related to the debasement trade, and to sum it up in one sentence: risk got repriced. Amazon + Alphabet in particular didn’t help sentiment with the sheer scale of Capex guidance (Capex being a forward-looking estimate of what they plan on spending on long-term things like data centres, servers, and equipment over the coming year). Either Big Tech can see the opportunity we can’t (with profits we can’t even model), or this is turning into a competition between big tech bros to see who has the biggest… chips.

Next headline: President Trump nominated Kevin Warsh to replace Jerome Powell as Fed chair when Powell’s term ends in May. Mainstream coverage leaned into “Warsh will be more hawkish on inflation and less willing to cut rates” story, which is ironic because it’s the complete opposite of what Trump likely wants. A hawkish Fed chair like this risks pushing interest rates and the US dollar higher, however. This increases the opportunity cost of holding investments that don’t spin off cashflow. No yield = no good, especially if governments start acting responsible. That one change in the “cost of money” lens is a big reason the debasement trade got smacked last week.

And this affected bitcoin too. Always the bridesmaid, never the gold. It seems as though it was immune to some of the gains precious metals experienced over the last couple months, but it clearly got hit with the risk-off sentiment nonetheless. While some, including me, view it long term as a ‘digital safe haven’ asset, the market clearly trades it as a high-risk tech proxy still. Of course the ol’ Jeffrey Epstein knew Adam Back (one of the key bitcoin OG’s) story didn’t help either (but spoiler alert, it’s a nothing-burger).

Stepping back from the noise, here’s what I’m thinking personally. I’m investing for over 20-years. So, do I change my strategy due to my paranoid X-feed. What about world war 3 and alien disclosure? NO. It’s not even a question I allow myself to think, because the urge to “do something” out of fear, is almost always a trap. For concentrated investors with genuine conviction, right now, this is volatility tolerance training.

Looking for high-returns? Lettuce hands need not apply.

If the news items from last week caused you to change something in your portfolio, it’s usually a sign you’re either not suited to strategies that offer the highest returns. Why? Because it also comes with high doses of volatility. Just because ‘you want it’, doesn’t mean you can handle it, and it’s not enough to ‘borrow conviction’ from your favourite only voice, either.

So, from one everyday investor to another: put in the time to learn for yourself, ideally from a range of voices that often don’t agree. Allocate money according to your firm convictions around the world you believe we’re getting, not the one you want. Most importantly, keep your time horizon honest – don’t invest short-term money in assets that need time to reach maturity. Getting it right from the outset should help you sit through drawdowns like last week, without spiraling. All investments come with the chance of the price going down instead of up. The best time to change your portfolio isn’t when you’re scared you were wrong, but when you realise you were right.

The best investments always wobble; the best investors shouldn’t.