When Doing Nothing Is the Smartest Investment Move

When markets turn volatile, the instinct to do something can feel overwhelming. Prices are falling, headlines are dire, and it seems like everyone else is heading for the exits. Yet for disciplined investors who avoided speculative gambles in the first place, doing nothing is often the smartest investment move you can make.

“Doing nothing” doesn’t mean being careless or disengaged. It means resisting panic-driven decisions, sticking to a well-constructed portfolio, and allowing time — and compounding — to do the heavy lifting. 

History shows that investors who stay invested through turbulence are far more likely to capture the market’s eventual recovery than those who sell at precisely the wrong time.

Volatility rewards patience, not activity

Market downturns are uncomfortable, but they’re not unusual. The 2020 pandemic crash is a perfect example: stocks plunged at record speed, only to rebound just as dramatically. Investors who sold in fear locked in losses, while those who held on participated in the recovery — and then some.

Doing nothing also has practical advantages. Fewer trades mean lower fees and, in taxable accounts, fewer capital gains taxes. Canadian investors benefit even more when investing through tax-advantaged accounts like the Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP), where patience is rewarded without the drag of annual taxation.

The key requirement, however, is that you must not be gambling. If your portfolio is full of speculative names with unproven business models, “doing nothing” can be reckless. But if at least 90% of your portfolio is invested in quality businesses with durable revenue, strong balance sheets, and long-term earnings growth, inactivity becomes a feature — not a flaw.

Build the right portfolio before you sit still

Doing nothing only works if the foundation is solid. Here are two examples of quality businesses:

• 1) Defensive or resilient companies whose revenues remain stable across economic cycles.
• 2) Cyclical businesses that experience volatility but grow meaningfully over time.

Take Fortis (TSX:FTS) as a classic defensive example. As a regulated utility providing electricity and natural gas, Fortis generates highly predictable cash flows in both good and bad economic environments. That stability has allowed it to raise its dividend for more than 50 consecutive years, which is an extraordinary record.

Even Fortis won’t be immune during a market correction, though. A 10–20% decline is possible in extreme cases. But its defensive nature typically limits downside and supports faster recoveries as investors rotate toward quality. For long-term owners, the smartest move during volatility is often to hold — and occasionally buy more.

When “doing nothing” feels the hardest

Cyclical or higher-risk stocks test investors’ resolve even more. goeasy (TSX:GSY) is a timely example. The stock is down roughly 38% from its 2025 highs, which can trigger the urge to sell and “stop the bleeding.” But volatility is inherent to its non-prime lending business, and history shows that sharp drawdowns are nothing new for the stock.

Despite the risk, goeasy has executed exceptionally well over the long term. Over the past decade, adjusted earnings per share compounded at over 25% annually, while dividends grew north of 30% per year. A $10,000 investment grew into nearly $97,000 — proof that volatility does not preclude strong returns.

Today, the stock underperforms the broader market over one-, three-, and five-year periods and trades more than 30% below its long-term average valuation. At around $130 per share, patient investors are being paid to wait with a 4.5% dividend that appears sustainable. For existing shareholders with a long time horizon and tolerance for risk, doing nothing — or selectively adding — may be the most rational decision.

Investor takeaway

Doing nothing isn’t passive — it’s disciplined. When your portfolio is built around high-quality, durable businesses, inactivity during market volatility helps you avoid panic selling, reduce costs, and stay positioned for recovery. 

Defensive names like Fortis reward patience with stability, while proven cyclical businesses like goeasy can reward investors who resist short-term fear. In investing, action feels productive — but patience is often more profitable.

The post When Doing Nothing Is the Smartest Investment Move appeared first on The Motley Fool Canada.

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Fool contributor Kay Ng has positions in goeasy. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.