FEAR and GREED

Fear and Greed – these two emotions can wreak havoc on even the most well-intentioned investor.  It’s been this way since – forever.

Using these emotions when making decisions is not the best strategy, yet many investors do, without even realizing it.  When our portfolios take a significant dip, fear encourages us to move our money out of the investment(s) in question.  When we see an investment with sharp increases in returns, greed motivates us to move our money to that investment.  [For those of you who haven’t seen the illustration below from the half-time report presentation, this will help to visualize the cycle of emotional investing.]

When investors allow emotions to determine investment choices, they 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 Chestnut Investment, 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 us for “essential support and hand-crafted strategies©” today.

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