We all have good days…we all have bad days…and we all have times when we feel bored. I’m going to tell you to beware all three! Why? Because when it comes to investing, any day you are feeling a strong emotion, whether it be euphoria, fear, or boredom you are more susceptible to making illogical, emotional decisions.
Think about it…the stock market is up, so you logon to trackyourwealth.com and you feel elated, secure, invincible which leads to, “Let’s buy more!” A wise decision? When is it wise to buy when prices are high? Or, the stock market is down, so you check your account values and you feel insecure, nervous and scared which leads to, “Move me to cash!” A wise decision? When is it wise to sell low? Or the stock market is flat, which it has been for some time, with the S&P 500 Index and the Dow Jones Industrial Average not hitting a new high all year. There is no news to react to, nothing to talk about, so you feel bored. Why? Because you are used to extreme emotions and boredom has come to signify that you are doing something wrong, so you declare, “Things aren’t moving. I must do something!” STOP! No you don’t!
Whenever we feel strong emotions we instinctively want to react, including when we are feeling bored. As human beings, we tend to associate boredom with lack of progress. Lack of progress, or stagnation, triggers fear and fear triggers a spontaneous, emotional decision to do something. What we often forget is that boredom is a fleeting emotion, just like euphoria or fear. What if we retrain our brains to identify the feeling of boredom with a time of rest, a time to just be, or a time to turn our focus to something else?
Today may end up being a good day, a bad day, or you may be a bored investor. No matter what the day brings, remember to stay SYSTEMATIC, UNEMOTIONAL, AND DIVERSIFIED with your investments. Embrace your plan and the four tenants of retirement as the ultimate defense against your emotions and to help you to really be SYSTEMATIC, UNEMOTIONAL, AND DIVERSIFIED. The plan should give you the confidence to go fishing and forget the worries of the world.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.