Broker Check

Back to Basics: Taking Emotion Out of Investing

| March 06, 2023

"The thing to do is to keep your mind when the world around you is losing theirs." – Warren Buffett

Here are a few tips to help you follow Buffett’s advice.

Don’t focus on daily fluctuations. With today’s 24/7 cycle, it’s hard to avoid financial news. But try not to focus on the daily—or worse yet hourly—swings.

Keep your sense of history. What looks scary at the moment may not seem so bad if you step back and look at performance over even longer periods. During the 50 years that ended December 31, 2020, the average Bull market lasted 52.8 months and returned 152.6%, while the average Bear Market lasted only 11.3 months and lost 32.1%.1,2

In the accompanying chart, you can see that market corrections are a normal part of market cycles. This chart shows the intra-year lows each year, going back to 1980 in yellow, with annual returns in gray. As the chart illustrates, there have been many years that saw declines intra-year.3

Volatility can be uncomfortable, but it is normal. Managing your emotions during good times is just as important. Ultimately, taking a long-term view of the markets is essential when pursuing your long-term goals.

If you would like to discuss the ways we can help you keep emotions out of your financial decisions, please give us a call or send an email. We look forward to hearing from you.

1, 2021

2, 2022

3 J.P. Morgan Asset Management, April 30, 2022. Past performance does not guarantee future results. Individuals cannot invest directly in an index. The return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less than their original cost.