There is a lot to pay attention to in the world today. From armed conflict to viruses to inflation to supply chains to politics to the financial markets. It is almost getting difficult to decide which of these deserves the most attention.
I can tell you that even long-term investors are starting to feel a bit overwhelmed with the headlines.
Headlines and social media take a psychological toll even on long-term investors. They conspire to drag you down into a pit of angst by pure repetition of negativity. If you get screamed at enough that everything is wrong in the world it impacts how you look at the world.
Add in the fact that your investment portfolio is no longer worth what it was at its peak (where, if we are honest with ourselves, is where we always want it to be!), and the corrosive fight or flight instincts begin to kick in.
As humans, we are wired to take action when we are afraid. Fear is both a tremendous asset and a potential liability. If you are about to get hit by a bus, fear and an adrenaline rush can save your life. If you are facing declining financial markets, fear and an adrenaline rush can lead you to permanently lock in the losses you fear.
As long-term investors with long-term financial plans living in an ultra-short-term world, we will struggle with our instinctive fears at times.
When the world looks so uncertain, when the risks look extreme, and when hope seems to be lost – those are the very moments to fear fear. Fear fear because it can lead you to make really bad decisions at exactly the wrong time.
The absolute best way to avoid fearing fear is to reduce (ideally eliminate) the number of negative data inputs that enter your brain. When you frequently check the value of your diversified portfolio when it is down, you build fear. When you soak up social media hype more than one minute per day, you build fear. When you watch cable news for more than four minutes per day, you build fear.
Our consistent investment process is designed to replace fear with calm confidence by aligning your investment portfolio with your financial plan using our Portfolio Segmentation. Using this tool grants volatile markets the opportunity to overcome their short-term fears – giving your diversified portfolio the time it needs to recover.
For long-term investors who refuse to fear fear, volatile markets may present an opportunity to build their long-term wealth by confidently adding to their long-term assets while they are at reduced prices.
These are certainly trying times and you likely are starting to feel your fear building. With our help, you planned for these trying times before they existed.
Now is the time to be thankful for long-term plans which minimize the impact of short-sighted traders’ fears on your long-term financial well-being. Now is the time to be calmly confident and fear fear.
Quote of the week: Franklin D. Roosevelt: “The only thing we have to fear is fear itself.”
Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through IAG Wealth Partners, LLC, (IAG) a registered investment advisor and separate entity from LPL Financial. Any opinions are those of IAG and not necessarily those of LPL Financial. Expressions of opinion are as of this date and are subject to change without notice. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. No strategy assures success or protects against loss. Investing involves risk including loss of principal.