Emotional Investments: A Symptom of Stock Market Jitters

The old-school stock market plan is a simple balancing act of buying when stocks are low and selling when the stocks are high. However, everyone knows that the stock market is a series of highs and lows, just like human psychology. Even the best investors can panic on their own, selling when the market is low and incurring loss as a result.


The U.S. stock market has been on a predominantly rising trend in recent years, but that does not necessarily mean a crash is imminent. However, the best investor is a well-prepared one. Developing a plan and strategies for a weak market now can prevent you from making emotional decisions that hurt your financial wellbeing later. Psychologist Dr. Gary Dayton says, “Making investment decisions based on emotions is always the worst way to invest.” Declining markets make plenty of investors anxious, stressed, scared, and depressed, jeopardizing their physical, mental, and financial health. Furthermore, “herd-mentality” kicks in and people will follow the pack pressure to sell in a bad market, eventually missing out on the upside when it eventually recovers.

One suggestion to inoculate yourself to market nerves is: turn off the news! The nonstop news cycle amplifies nerves and can aggravate the stress of a market crash. Next, a good investor should make a “wish list” of potential stocks and funds they might like to buy one day. The upside of a falling market is that new investment opportunities are usually available at a lower-price point. This could be a great time to add to your portfolio.

Another tip our Apex advisors readily support is to “work with a financial advisor.” You can start working now to develop a “comprehensive, written plan that sets out your important financial goals and how you will achieve them. This will be your map when the going gets tough.” Good guidance and a strong plan can insulate you from financial risk, even in the toughest market. Furthermore, a financial advisor can help avoid emotionally motivated decisions in favor of well-considered, reasonable choices.

For more tips and tricks speak with a financial advisor at Apex. We provide highly personalized analysis to help you make intelligent and thoughtful decisions and maximize your portfolio’s potential.

Source:
http://money.usnews.com/money/personal-finance/mutual-funds/articles/2015/07/14/6-strategies-to-steer-you-through-a-market-correction