Stick to Your Investment Plan
Any solid investment plan will only work if it is adhered to during varying market environments. In the face of market turmoil, some investors may find themselves tested, making impulsive decisions that go against their investment plan. Although markets have rewarded discipline, humans are unfortunately not wired for disciplined investing. Does any of this sound familiar:
“The market tanked and I should have seen it coming”
“I wasn’t wrong about that stock — just unlucky”
“It was a bad idea, but I don’t want to sell at a loss”
“I knew this stock was going up”
“My research confirms that this is a great stock”
When people follow their natural instinct, they tend to apply faulty reasoning to investing (read more about rational investing). They may struggle to separate their emotions from their investment decisions. Investors who follow a reactive cycle of excessive optimism and fear may make poor decisions at the worst times. It’s actually very tough, if not impossible, to know which stocks, market sectors, or asset classes will do better than others. Indeed behavioral economics suggests that overconfidence in your ability to pick winners is a typical bias, reinforced in hindsight by our tendency to seek out confirmingNormally I can help with things like this, but I don’t seem to have access to that content. You can try again or ask me for something else.
