If there’s one constant in investing, it’s that when markets get challenging, investors reassess their appetite for risk. We’ve seen this play out over and over again these past 50 years. In those periods, the instinct is always the same: how do I protect my assets? We’re seeing that dynamic unfold once again today.
The problem is that investing for “safety” is a false goal. There is no investment that guarantees safety. True safety, in my view, means your investments outpace inflation. If they don’t, your purchasing power erodes and your standard of living declines. Just think about what your first house cost and what that same house costs today.
My experience tells me that most investors find the slow erosion of value easier to tolerate than short-term volatility. Volatility is like a winter storm — it rolls in and disrupts everything. It’s difficult to watch your assets drop in value. Too often, as investors, we anchor to the highest value we’ve enjoyed and treat any drop from that level as a “loss.” In reality, that peak was never a permanent baseline and treating it that way is just a head game.
At the end of the day, it comes down to behavior. The fear of loss can be one of the greatest obstacles to wealth creation. The stock market offers something many other assets do not — instant liquidity. You can wake up, read the headlines, and sell immediately. That’s not possible with your house, art, or private investments. Easily done. But the ramifications can be significant and, over time, disastrous. Often, the rationale is, “I can get back in when the market is lower.” But those opportunities only exist when others are selling, not buying. Stepping into a firestorm runs against how most people are wired. Very few investors do it.
There are two primary ways investors lose money: holding too much cash or selling your stocks when fear takes over. What’s the alternative? Stay invested. Simple in theory, but difficult in practice. It requires patience and a willingness to accept volatility. But after enough cycles, you realize that the damage is rarely done by the market itself — it’s done by how investors respond to it. That’s where most people get into trouble.
We see this pattern play out all the time. Experience teaches you that while market cycles change, discipline cannot. No one welcomes a decline in value, but it’s an inherent part of investing — and more often than not, those periods are temporary. Through it all, our focus remains on preserving purchasing power.
After patience and discipline, the last key to investment success is diversification. All markets have a day in the sun and a day in the clouds. Trying to predict what will lead next is a fool’s game. It’s not only difficult, it’s unnecessary. If you look at returns over the past 5-10 years across most asset classes, it’s amazing how often they moved together.
So here we are in the midst of another firestorm. The events in the Middle East are serious and deserve our attention. The news cycle has stirred strong views and pushed many to imagine worst-case scenarios that leave little room for a more balanced long-term perspective. That is exactly where mistakes get made — and why you rely on us during periods like this. From an investment standpoint, the discipline cannot change. Staying the course is still the right approach.
This represents the views opinions of GW&K Investment Management. It does not constitute investment advice or an offer or solicitation to purchase or sell any security and is subject to change at any time due to changes in market or economic conditions. The comments should not be construed as a recommendation of individual holdings or market sectors, but as an illustration of broader themes. Data is from what we believe to be reliable sources, but it cannot be guaranteed. GW&K assumes no responsibility for the accuracy of the data provided by outside sources.
Keep
Reading
GW&K Investment Management Appoints New Partners
Macro | Press Release
Brett Kozlowski, Brian Maguire, and David Rouse named Partners of the firm.
Economic And Market Implications Of The US-Iran Conflict
Macro | Insight
Global Strategist Bill Sterling discusses potential market implications — especially for global energy — and key considerations for navigating volatility from the conflict involving Iran.
AI is quickly becoming an economy-wide cost revolution, not just a tech story. Explore how recursive self-improvement could compress disruption timelines, lift corporate margins broadly, and create a new secular growth category in AI governance.
We use cookies to improve your experience on our website. To accept cookies click Accept & Close, or continue browsing as normal. For more information or to learn how to opt out of cookies, please see our cookie policy.
GW&K Investment Review 1Q 2026
ECONOMIC COMMENTARY
If there’s one constant in investing, it’s that when markets get challenging, investors reassess their appetite for risk. We’ve seen this play out over and over again these past 50 years. In those periods, the instinct is always the same: how do I protect my assets? We’re seeing that dynamic unfold once again today.
The problem is that investing for “safety” is a false goal. There is no investment that guarantees safety. True safety, in my view, means your investments outpace inflation. If they don’t, your purchasing power erodes and your standard of living declines. Just think about what your first house cost and what that same house costs today.
My experience tells me that most investors find the slow erosion of value easier to tolerate than short-term volatility. Volatility is like a winter storm — it rolls in and disrupts everything. It’s difficult to watch your assets drop in value. Too often, as investors, we anchor to the highest value we’ve enjoyed and treat any drop from that level as a “loss.” In reality, that peak was never a permanent baseline and treating it that way is just a head game.
At the end of the day, it comes down to behavior. The fear of loss can be one of the greatest obstacles to wealth creation. The stock market offers something many other assets do not — instant liquidity. You can wake up, read the headlines, and sell immediately. That’s not possible with your house, art, or private investments. Easily done. But the ramifications can be significant and, over time, disastrous. Often, the rationale is, “I can get back in when the market is lower.” But those opportunities only exist when others are selling, not buying. Stepping into a firestorm runs against how most people are wired. Very few investors do it.
There are two primary ways investors lose money: holding too much cash or selling your stocks when fear takes over. What’s the alternative? Stay invested. Simple in theory, but difficult in practice. It requires patience and a willingness to accept volatility. But after enough cycles, you realize that the damage is rarely done by the market itself — it’s done by how investors respond to it. That’s where most people get into trouble.
We see this pattern play out all the time. Experience teaches you that while market cycles change, discipline cannot. No one welcomes a decline in value, but it’s an inherent part of investing — and more often than not, those periods are temporary. Through it all, our focus remains on preserving purchasing power.
After patience and discipline, the last key to investment success is diversification. All markets have a day in the sun and a day in the clouds. Trying to predict what will lead next is a fool’s game. It’s not only difficult, it’s unnecessary. If you look at returns over the past 5-10 years across most asset classes, it’s amazing how often they moved together.
So here we are in the midst of another firestorm. The events in the Middle East are serious and deserve our attention. The news cycle has stirred strong views and pushed many to imagine worst-case scenarios that leave little room for a more balanced long-term perspective. That is exactly where mistakes get made — and why you rely on us during periods like this. From an investment standpoint, the discipline cannot change. Staying the course is still the right approach.
Harold G. Kotler, CFA
Founder-Chairman, Chief Investment Officer
Harold G. Kotler, CFA
Founder-Chairman, Chief Investment OfficerDisclosures
This represents the views opinions of GW&K Investment Management. It does not constitute investment advice or an offer or solicitation to purchase or sell any security and is subject to change at any time due to changes in market or economic conditions. The comments should not be construed as a recommendation of individual holdings or market sectors, but as an illustration of broader themes. Data is from what we believe to be reliable sources, but it cannot be guaranteed. GW&K assumes no responsibility for the accuracy of the data provided by outside sources.