For many of our clients living in France or planning to relocate here, investing across borders adds an extra layer of complexity. Exchange rates, taxation, and residence status all influence how much you keep and how your portfolio performs. Add market uncertainty to the mix, and it is easy to see why people feel uneasy about making investment decisions.
Market fluctuations are a normal part of investing, but they often appear when investors least expect them. Over the past year, we have seen interest rates slowly coming down, shifting inflation trends, tariff tantrums, and unpredictable economic data, all of which have kept global stock markets moving in both directions. The S&P 500, for example, has shown sudden drops and strong recoveries, reminding us how quickly sentiment can change.
For most people, this uncertainty can be nerve-racking. When values fall, the natural instinct is to react and take action. Yet decisions made in moments of emotion are usually where the biggest mistakes occur.
During uncertain times, discipline and perspective matter most. Short-term headlines can push people to act on impulse, but knowing where the most common investment mistakes occur is the first step in avoiding them.
Not Understanding How Markets Move
When markets are volatile, the temptation is to chase the safe market or the next big opportunity. But history shows that markets do not move together over time, and that chasing last year’s winner rarely pays off.
Take technology as an example. Some of the firms that powered the post-pandemic recovery, such as Zoom, are today priced at a fraction of their highs because valuations had risen so far.
Today’s headline grabbers are linked to Artificial Intelligence, although in this case, the underlying AI theme is still growing strongly. Reports show the global AI market was valued at about 233 billion US dollars in 2024 and is projected to reach around 1.77 trillion US dollars by 2032, representing annual growth of nearly 30 per cent. Other research puts it even higher, at roughly 638 billion in 2024, rising to 3.7 trillion by 2034. So, while valuations may be stretched, the industry itself is far from slowing down.
Looking further back provides a clearer perspective. Here are some longer-term approximate numbers to consider. In local currency terms, in the 25 years since the dot com bubble highs in the year 2000:
- The UK FTSE 100 is up just 40%
- The German DAX is up 300%
- The French CAC 40 is up a mere 15%
- The Japanese Nikkei is up 250%
- The United States S&P 500 is up around 450%, with most of the strength coming since 2008.
- Emerging markets are up more than 450%, but with most of the gains between 2003 & 2008.
These figures underline a simple truth: markets move in cycles, not in unison. No one knows which market will lead over the next twenty-five years, which is precisely why diversification matters.
Not Being Diversified Enough
Relying too heavily on one country, company, or sector exposes you to risks that no amount of skill or timing can remove. Diversification remains the simplest and most powerful way to manage risk.
By spreading investments across a range of markets and asset types, you reduce the impact of any single downturn. It is not about finding the perfect investment. It is about building a portfolio that can withstand shocks and adapt to changing global conditions. Over time, steady consistency almost always outperforms bold but narrow bets.
Today, it has never been easier or cheaper to achieve proper diversification. Global index funds and exchange-traded funds give investors access to thousands of companies across continents and industries at very low cost. This wider exposure balances performance and removes emotion from decision-making, which is especially valuable when markets are unpredictable.
Diversification does not eliminate volatility, but it smooths the ride and helps investors avoid knee-jerk reactions when confidence wavers.
Chasing the Latest Trends
Every market cycle produces its stars. This pattern is not new. History shows that investors who chase the next big thing often arrive just as the trend is turning. Buying what is fashionable usually means paying high prices, leaving little room for growth and plenty of room for disappointment.
A disciplined and diversified portfolio avoids this trap. It does not depend on predicting the next winner or timing the next hot theme. Instead, it spreads exposure across different sectors so that gains in one area can offset declines in another. Over time, that steady and measured approach tends to outperform those who follow the crowd.
Selling When Markets Fall
When markets fall and headlines turn gloomy, feeling uneasy is natural. Many investors react by selling, hoping to avoid further losses. In reality, that is often when long-term damage occurs. Selling into weakness locks in losses, and those who move to the sidelines frequently miss the recovery that follows.
Recent history shows how quickly markets can bounce back once confidence returns. Sharp declines are frequently followed by strong rebounds, and missing even a few of the best days can have a lasting negative effect on your returns.
Staying invested through uncertainty may feel uncomfortable, but it is often the most rewarding choice in the long run.
As Warren Buffett put it:
“Be fearful when others are greedy and be greedy when others are fearful.”
Think of it like a sale in the shops. When prices drop, most people see an opportunity to buy. Investing works in much the same way. When strong assets fall in value, it may present an opportunity, provided your overall strategy and time horizon remain sound.
The key is to stay calm, stay invested, and remain consistent. Market downturns test patience, but they also reward discipline.
Trying to Time the Market
Many people believe that success comes from perfect timing, buying low and selling high. In truth, even experienced professionals struggle to predict market movements with accuracy. Short-term swings are often driven as much by emotion as by data, and trying to outguess them usually causes more harm than good.
Recent years have shown how quickly markets can change direction without warning. Investors who moved to cash in uncertain times often found it challenging to re-enter, missing much of the rebound.
The better approach is time in the market, not timing the market. Regular investing, periodic rebalancing, and patience usually produce the best results. This steady discipline allows compounding, the process of earning returns on previous gains, to work quietly in your favour.
Successful investing is not about perfection but about consistency, reason, and preparation for the unexpected.
Forgetting the Long-Term View
Volatility is not a fault of the market; it is a feature of how it works. After all, capital gains are just upward volatility. Prices move up and down because confidence, inflation, and policy all shift over time. Short-term uncertainty can feel unsettling, but it also creates opportunity. Investors who remain calm, diversified, and patient tend to come out ahead.
At Kentingtons, we help clients across France and beyond structure their investments to be globally diversified and tax-efficient under French law. For international residents, it is not only about market performance but also about how those returns fit within the broader context of cross-border wealth, taxation, and long-term planning.
The goal is not to avoid risk entirely, because that is impossible, but to manage it wisely through a portfolio that can weather short-term swings and stay aligned with your broader financial objectives. Markets will always rise and fall, but a well-constructed plan keeps you on course through every cycle.
As I said earlier, time in the market matters far more than timing the market.
If you would like us to review your current structure or simply talk through your long-term plans, our advisers are here to help.