Overall market temperatures have been so mild for so long, many newer investors have yet to weather a perfect market storm. Even if you have, you may have forgotten how panic-inducing those times can be. This worries us. Experience and evidence alike show us how severely bear markets test investor resolve. Here are 10 timely actions you can take when financial markets are tanking … and, frankly, even when they’re not.
After nearly a decade of leaving the federal funds rate at zero percent, the time finally came on December 16, 2015. Since then, the Fed has made several modest increases. But what do these rate changes mean to your financial well-being? Is there anything you should “do” to your investment portfolio when they occur?
For a number of investors, 2017 was a paradox. The harder they tried to enhance their results by paying close attention to current events, the more likely they failed to capture the rate of return the capital markets offered. Keep informed on current events as a responsible citizen but let the capital markets decide where returns will be generated.
Have you caught cryptocurrency fever, or are you at least wondering what it’s all about? Odds are, you hadn’t even heard the term until recently. Now, it seems as if everybody and their cousin are getting in on it. Psychologists have assigned a term to the angst you might be feeling in the heat of the moment. It’s called “FoMO” or Fear of Missing Out. So before you make any leaps, let’s take a closer look.
Focusing on what you can control, versus what you cannot, can lead to a better investment experience. Whether you’ve been investing for decades or are just getting started, at some point on your investment journey you’ll likely ask yourself some of these questions.
There are so many investment-impacting behavioral biases, we could probably identify at least one for nearly every letter in the alphabet. Today, we’ll continue with the most significant ones by looking at: hindsight, loss aversion, mental accounting and outcome bias.