In last week’s blog Garry challenged us to have an opportunistic perspective when stocks go “on sale.” This occurs, of course, when we experience a drop in the markets. It’s not a question of if it will happen, but when it will happen. Markets are cyclical. They always have been and always will be.
There is one little, but powerful, human emotion that keeps most people from doing the right thing during a market decline … FEAR! This powerful emotion causes many to make the exact opposite decision they would have made in the absence of fear. Remember how hard it is to follow the time-tested advice – “Buy Low & Sell High” when markets are falling?
I believe fear is a negative emotion 99% of the time. In contrast, my 6-year-old grandson loves riding his KTM dirt bike, and I want him to have a healthy fear of taking unwise risks when he’s riding. But as adults, fear almost always holds us back and clouds our best judgement.
In investing, and in life, don’t give in to the emotion of fear. Recognize it, call it out, pray about it, and don’t let it cloud your best judgement. Your portfolio and your life decisions will be better for it.