Transcript
Emotional investing happens when fear, greed, and uncertainty drive decisions instead of logic and long-term strategy.
Common examples include panic selling during market downturns, locking in losses just as recovery begins, or buying stocks at their peak, after they have already surged.
Many people driven by fear and greed will lose. When markets are selling off, the fear of more losses causes many to sell after significant portfolio declines, which could be fine if the market continues to drop.
However, at some point, the market reaches a bottom and will recover. Fear still grips many people, and they fail to allocate early enough to participate in the recovery. Many wait until after the market is fully recovered to invest and it is too late.
Fear causes quite a few people to exit at the worst possible times, while greed leads them to take on excessive risk near market tops. Over time, these repeated emotional mistakes erode wealth and undermine even the best-designed long-term plans.
Learn about an investment option that could help take the emotion out of investing.
Visual: MSCM.NET
Past performance is not necessarily indicative of future results. Investing involves risk. Principal loss is possible.