In these uncertain times it is easy to feel like things are out of control.
It’s important to realise that investment markets are moving up and down all the time – stability is not ‘normal’.
Carl Richards from www.behaviourgap.com describes it like this:
‘Imagine being on a boat in the ocean on a very still day. No wind. No swell. The water is flat as a mirror. The calm goes on just long enough for you to start to feel like it’s normal.
When a small wave finally does come, it feels big. When a normal-sized wave comes, it feels enormous. And when a big wave comes…?
As scary as they might feel, waves are normal. Even storms are normal. The question is, what do we do when a storm does come?
In terms of investing, people often freak out and abandon ship.
You know how that goes: We sell when the market is low because it’s crashing and that’s scary, then we buy when the market is high because it’s rising and that’s exciting.
Obviously, this is a very bad idea. The last thing you want to do as an investor is buy high and sell low’.
As anyone who has been investing for a while knows, storms happen. Volatility is normal, ups and downs are expected. In times of turbulence focus on the longer term goal, not the short term result.