05 Apr How to Avoid Emotional Reactions in Investing
You have probably experienced a nervous feeling before delivering a speech or heading up to a podium. If you’ve ever had sweaty palms during this experience, you’re not alone – studies indicate that public speaking is actually the number one fear of Americans, and ranks above things like flying or encountering poisonous snakes.
This same nervous feeling at the podium also occurs in finance, and it often results in emotional reactions in investing. When there is a stock market downturn, for instance, a similar instinct of “fight-or-flight” also occurs. Many investors encounter a strong desire of “flight”, or to sell their investments because of poor short-term performance and a drop in the markets.
Staying rational in investing
When it comes to emotional reactions in investing – and public speaking – many of the short-term emotional responses you encounter may be completely irrational. That instinct to flee when the markets are down, for instance, is often a short-sighted response that ignores your long-term goals. Despite any short-term fluctuations in the stock market, the market has always recovered eventually, and gone to reach new highs afterwards.
Utilizing a financial advisor to avoid emotional reactions in investing
Reaching your goals and needs in the long-term should not be based on short-term emotional reactivity. At LexION Capital, we can utilize our data-driven, analytical long-term perspective to help guide you to this success. We can take steps to reach your unique goals and needs and stay grounded during times when emotional reactivity is tempting.
Want to learn more about our long-term investment approach? See more of our updates each week on our LexION blog. And don’t hesitate to reach out to us with questions about how our services might be right for you.