This weekend, I turned on the TV for some background noise and stumbled across the Women’s Euro Cup quarterfinal between France and Germany. I’m no diehard soccer fan, but I’ve always found women’s soccer more entertaining than the men’s game. This one? Instant classic.
The match went into extra time tied 1-1, eventually needing a seven-round penalty shootout to decide the winner — Germany. Fourteen shots. Eleven goals. Two saves. One off the crossbar. Drama, nerves, and… behavioral finance?
Yep. Stay with me.
A Goalie, a Water Bottle, and the Best Data in the Game
As the penalty shootout began, the broadcast zoomed in on the German goalie’s water bottle. Scribbled on it? Notes about each French player’s shooting tendencies. These are world-class goalies, armed with world-class data. And still, they saved just two of fourteen shootout kicks!
Now here’s where it gets interesting. Want to guess how many times the goalies stood still in the center of the goal instead of diving left or right?
Zero.
And it’s not just them. A white paper analyzing 286 elite-level penalty kicks found that goalies only stayed in the middle 6% of the time — despite evidence that standing still gives them the best chance of making a save.
Why? Because of something called action bias — and it’s the same trap investors fall into all the time.
What’s Action Bias — and Why Does It Hurt Investors?
Action bias is our natural urge to do something in the face of uncertainty, even when doing nothing is actually the smarter move.
It’s the investor in the middle of a market downturn who says, “what changes should we be making to my portfolio?”
It’s the goalie who dives, even though the data says stay put. It’s us wanting to feel like we’re in control, even if the action makes things worse.
Let’s rewind a few examples from recent history:
- 2009: After a 55% drop during the Great Financial Crisis, many investors bailed at the bottom… just in time to miss the 400% rebound and the longest bull market in U.S. history.
- 2020: Markets dropped 34% in a month due to covid-19. Investors panicked. Stocks finished the year up 16%, and doubled from their 2020 bottom by the end of 2021.
- April 2025: The market fell 10% in two days after Liberation Day and the announcement of new tariffs. Since then? The S&P 500 is up 25%.
In each case, the best action was no action. But it sure didn’t feel that way at the time.
Why Goalies — and Investors — Struggle to Stay Put
Goalies feel worse when they stand still and let in a goal than when they dive and miss. “At least I tried,” they tell themselves. So they dive — even when diving reduces their odds of success.
Sound familiar?
Investors do the same thing. We tend to make the exact wrong decision at the exact wrong time for what feels like the exact right reasons. We’re hardwired to want to fix, tweak, and react — especially when things look scary. But just like the goalie who dives left or right, our reaction can reduce the odds of long-term success.
A Plan of (In)Action
Market volatility will always be with us. Tariffs might return in August. The Fed might surprise us. Global unrest might heat up. That’s the ever present wall of worry that investors face as a price of admission for investing.
But here’s what you can do to fight action bias:
- Acknowledge the urge. Recognizing action bias is the first step to avoiding it.
- Pre-decide your rules. Commit to what you will and won’t do before the next market storm hits. Say “yes” to rebalancing your portfolio and “no” to short-term decisions with your long-term money.
- Use an accountability partner. A financial advisor can help you stay calm and stick to the plan.
- Trust history. Every past market decline has been followed by a recovery. Betting against that track record is… bold.
- Prioritize your own headlines. Let the news of your life — not the news on your screen — guide your financial decisions.
Stand in the Middle
The next time markets wobble, remember: goalies who stand still have better odds. So do investors. The trick isn’t just to stay the course — it’s to know that staying still is a course. And often, it’s the best one.
Castle Quote: “My rule — and it’s good only about 99% of the time, so I have to be careful here — when these crises come along, the best rule you can possibly follow is not ‘Don’t stand there, do something,’ but ‘Don’t do something, stand there!’”— Jack Bogle
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