Pursuing a Better Investment Experience – Decision 8: Manage Your Emotions
The idea behind investing is to buy low and sell high. Yet, many people struggle to separate their emotions from investing. Markets go up and down. Following an emotional investment cycle sparked by reactive decisions may lead to making poor investment decisions – buying at higher prices and selling at lower prices – at the worst times.
The 2008–09 global market downturn offers an example of how the cycle of fear and greed can drive an investor’s decisions. Some investors fled the market in early 2009, just before the rebound began. They locked in their losses and then experienced the stress of watching the markets climb.
Staying disciplined through rising and falling markets can pose a challenge, but it can be crucial for long-term success.