Investing is emotional because we're human. Our emotions can take us in all kinds of directions in response to what the market is doing. That can make things tricky because sometimes the best thing to do is the opposite of what our instincts tell us to do. When the market is doing great, it feels great. We feel optimism, excitement, even euphoria. Our instincts might tell us to buy more because we feel invincible. It feels like the bull market will last forever.
But that's the moment in the market cycle where we're actually the most vulnerable because the market will take a turn at some point. It's a normal and expected part of the cycle. When the market does go into a downturn, we might feel anxiety, then fear, and eventually desperation and panic. And in those moments, our instincts might tell us to get out of the game entirely, even though that may not be what's best for our long-term plans.
When things feel chaotic, and we're only hearing bad news, it's easy to miss the fact that the market's lowest points are really the moments that hold the most opportunity for investors. It's just like the saying goes. The night is always darkest before the dawn. But on the way back up, things aren't that much easier, because you never quite know when the good times will return or how long they'll last when they do return.
It's important to zoom out and stay focused on the bigger picture. Successful investing isn't about reacting to what happens in the market day to day. It's about setting goals and putting a long-term plan in place that you'll be comfortable sticking to no matter what the market is doing. And you don't have to feel like you're making these life-changing decisions alone.
Your advisor can help keep things in perspective during the good times and the not-so-good times and help you make decisions that are right for your goals. We're on this journey together. And together, we'll move forward.
