Cycle of Investor EmotionsFear and greed – these two emotions can wreak havoc on even the most well-intentioned investor. Using these emotions when making decisions is not the best strategy, yet many of us do it without even realizing it. When our portfolios take a significant dip, fear encourages us to move our money out of the investment in question. When we see an investment with sharp increases in returns, greed motivates us to move our money to that investment. The following illustration will help you visualize the cycle of emotional investing.
When we allow emotions to determine our investment choices, we do the opposite of the proven strategy, "buy low and sell high." In an effort to cope with the uncomfortable nature of weathering market downturns, we sometimes instinctively do the opposite of this investing principle.
At McGervey Wealth Management, we try to help our investors by minimizing the number of irrational decisions made out of fear or greed. When the market is soaring, it's easy to think it will continue; when it's down, it's easy to think it will never climb again. We can help you stay focused on your long-term goals rather than concentrating on short-term ups and downs. If your emotions have wreaked havoc on your investments, contact a wealth advisor at McGervey Wealth Management today.