Why Panic Selling Is One of the Most Expensive Mistakes an Expat Investor Can Make

March 2026

By Will Glyn

If you’ve been checking your portfolio lately and feeling a knot in your stomach, you’re not alone. Between the Iran conflict disrupting global energy markets, oil prices up more than 25% since the war began, a US Supreme Court ruling throwing tariff policy into chaos, and the S&P 500 sitting roughly 7% below its recent peak, it’s been one of those stretches where even experienced investors start wondering whether they should just move everything to cash and wait it out.

I get it. When you’re living abroad — earning in one currency, invested in another, and watching headlines from a different time zone — the urge to do something can feel overwhelming. But here’s the thing: almost every piece of historical evidence we have tells us that the worst thing you can do in a moment like this is sell.

This isn’t about being blindly optimistic. It’s about understanding why the maths of staying invested so heavily favours patience — and what expats specifically can do to make sure short-term noise doesn’t derail long-term plans.

A handful of days drive most of the returns

Here’s a stat that surprises most people: the vast majority of your long-term investment returns come from a tiny number of trading days. Miss those days, and the damage is enormous.

According to JP Morgan’s analysis, a hypothetical $100,000 invested in the S&P 500 over the twenty years from 2006 to 2025 would have grown to approximately $806,000 — more than an eight-fold increase. But if you’d been out of the market on just the ten best days during that entire period, your return drops to around $359,000 — less than half. Miss the twenty best days and you’re looking at roughly $212,000. Miss twenty-five and it’s $170,000.

That’s a staggering difference, and it underlines a crucial point: nobody knows in advance which days will be the good ones. Seven of the ten best days in the market over the past two decades occurred within two weeks of the ten worst days. The big rebounds tend to follow the big sell-offs almost immediately — which means that if you sell during the panic, you’re almost certainly going to miss the recovery that follows.

Think about what’s happened just this month. Markets dropped sharply when Trump threatened strikes on Iranian energy infrastructure, only to bounce back the same session after Israel announced it was helping to reopen the Strait of Hormuz. If you’d sold into that morning’s fear, you’d have crystallised losses just hours before the recovery. That kind of whiplash is exactly why trying to time the market is a losing game.

We’ve been here before — and recoveries have been getting faster

It might feel like the current combination of war, energy disruption, and trade uncertainty is unprecedented. But markets have faced comparable shocks before, and the pattern is remarkably consistent: sharp falls followed by recoveries, often faster than anyone expects.

In April 2025, the S&P 500 fell almost 20% in a single week after the “Liberation Day” tariff announcements — the deepest one-day sell-off since the 2008 financial crisis. Investors who sold during that week locked in devastating losses. Those who held on saw markets hit a new all-time high just two months later. By the end of 2025, the index had posted 39 all-time closing highs — the fifth best year for records since 2000.

Go back further: the 2020 Covid crash was being compared to 2008 in real time, yet the bear market lasted just 33 days — the shortest in history. The investors who stayed put through those terrifying early weeks of lockdown were rewarded with one of the strongest recoveries on record.

A “bear market” is typically defined as a fall of 20% or more from a recent high, sustained over time. The average bear market since the Second World War has lasted roughly nine and a half months. But in the modern era, they’ve been getting shorter and sharper. The current drawdown of around 7% is uncomfortable, but it’s a long way from bear market territory — and even if it got there, history suggests the recovery would come faster than the headlines would have you believe.

Why this matters even more for expats

For expats, panic selling carries an extra layer of risk that domestic investors don’t face: currency.

If your investments are denominated in dollars or sterling but your day-to-day spending is in euros, dirhams, or baht, selling during a dip doesn’t just lock in losses on the investment itself — it can also lock in an unfavourable exchange rate. Right now, currency markets are volatile too. The dollar has been swinging on every piece of Iran-related news. If you sell your dollar-denominated investments at a market low and convert to your local currency at a weak dollar rate, you’ve been hit twice.

Equally, if you’re an expat with investments spread across multiple jurisdictions, selling and rebuying can trigger tax events — particularly capital gains — in ways that staying invested simply doesn’t. The tax implications of selling in a panic are rarely top of mind when you’re watching your portfolio drop, but they can add meaningfully to the cost.

The compounding effect rewards patience

Compounding is often called the eighth wonder of the world, and for good reason. When your returns generate their own returns, the growth becomes exponential over time — but only if you leave the money invested long enough for the effect to build.

Every time you sell out of the market and sit in cash, you’re resetting that compounding clock. Even if you eventually buy back in, you’ve lost the growth on the growth during the period you were on the sidelines. Over a five-year horizon that might not feel like much. Over twenty or thirty years — the kind of timeframe most expats are working with when it comes to retirement planning — the difference is enormous.

Fund managers appear to be losing their nerve right now: according to Bank of America’s latest survey, cash levels jumped to 4.3% from 3.4% — the sharpest increase since the Covid sell-off in March 2020. That’s professional money managers moving to the sidelines. History tells us that these spikes in cash allocation tend to mark the point of maximum fear — not the point of maximum risk.

Regular investing takes the emotion out of it

If the idea of staying invested during a period like this feels easier said than done, there’s a practical solution: invest regularly. Setting up a monthly contribution to your portfolio means you buy more units when prices are low and fewer when they’re high — an effect known as dollar (or pound) cost averaging.

Over time, this smooths out the impact of volatility and removes the need to make any timing decisions at all. You don’t need to watch the VIX or second-guess every geopolitical headline. You just keep contributing, and the maths works in your favour.

For expats, this also helps manage currency risk. If you’re earning in one currency and investing in another, a regular monthly contribution means you’re averaging out the exchange rate over time rather than being exposed to a single conversion at a single point. In a period of elevated currency volatility like the one we’re in now, that kind of discipline is worth its weight in gold.

What matters more than markets: having a plan

The real reason people panic sell isn’t because they don’t understand the theory. It’s because they don’t have a plan that accounts for volatility in the first place. If your portfolio is properly structured for your timeline, your risk tolerance, and your goals, then a 7% drawdown — or even a 20% one — shouldn’t change your strategy. It should already be priced into the plan.

That’s where proper advice makes the difference. A well-built investment plan for an expat should factor in your expected retirement date, which currencies you’ll need income in, whether you’re likely to repatriate, and how your other assets — pensions, property, insurance — fit together. When you have that kind of structure underneath you, weeks like the ones we’ve just had become a lot easier to tune out.

How We Can Help

At PWA, we work with expats across the world to build investment portfolios that are designed for the long term — and that means designing them to withstand exactly this kind of volatility. Whether you’re investing a lump sum, building wealth through a regular savings plan, or reviewing an existing portfolio that might not be working as hard as it should, we can help you put a clear plan in place.

• Review your current portfolio — and assess whether it’s properly structured for your goals, timeline, and risk tolerance in the current environment
• Build a diversified, multi-currency strategy — that accounts for where you live, where you earn, and where you’ll eventually retire
• Set up a regular savings plan — that takes the emotion out of investing and harnesses the power of cost averaging
• Stress-test your plan against downturns — so you know exactly where you stand when volatility hits, rather than guessing

If you’d like to talk through your situation, book a call with me.

Will is an Independent Financial Adviser with over a decade of experience helping expats make the most of their international status.