During discussions with people at networking events or social events or just hanging out one question remains constant. What do you do? When I respond, investor coach or investment adviser or fiduciary adviser the reaction is predictable. You can see it in their faces, OMG stocks. Fear, is etched on their faces. This of course is not always the case but it happens often enough to address here.
Many of these investors have been through the tech crash of 2000-3 as well as the housing crisis of 2008. These investors during a time of crisis, when acting on their own or even when they have a financial adviser will panic and sell at the bottom. Thereby locking in their losses. This happens at nearly every ‘crisis’. They continue the trend by re-entering the market AFTER the run up. This is just the opposite of what they should do.
If you have a financial adviser who allows you to perform the destructive behavior of selling low and buying high, fire them. If your current adviser allows you to panic during down turns and buy the hot asset class or stock during times of hype, fire them. If you do not follow your adviser’s advice during times of crisis as well as times of hype, fire them.
A true fiduciary adviser provides you with the prudent portfolio at YOUR level of risk and keeps you disciplined during market extremes.
If you haven’t guessed the problem with most investors is not the stock market volatility but rather the problem is the enemy is within YOU. Most of us without the proper guidance or leadership will allow our emotions to guide our decisions. This is true not only of investment decisions but any important decision we need to make in life.
I could discuss all the evidence on why investing in the equity markets is one of the greatest wealth creation tools on the planet. And when I am done you will follow your emotions and listen the Wall Street bullies and your friends and family. Each will give you a number of reasons to panic or buy the hype.
The question becomes WHY? Why do we continue to repeat this destructive behavior? Einstein has a quote that might be relevant here. The definition of insanity is doing the same thing over and over again expecting different results.
A great solution to this problem is to hire an investor coach/fiduciary adviser to help you develop a plan and remain disciplined. This is the true value of any competent adviser. You can take advantage of the great wealth creating opportunity of the equity markets. However, doing it alone will typically lead to poor results and a lot of anxiety.
Fire your broker/agent and hire an investor coach/fiduciary adviser.