The Cycle of Investing: Understanding it’s ups and downs
Understanding the cycle of investing may help you avoid easy pitfalls.
Please refer to our transcription below if it is easier and/or more convenient for you:
Investing should be easy. Just buy low and sell high, but most of us have trouble following that simple advice.
Why is it so hard? It has to do with fear, greed, and something called the investment psychology cycle. As the market cycles upward, greed drives investors to jump in, but they may pay too high of a price. When the market cycle’s downward, fear sets in, and investors may sell often at a loss.
Want a real-world example? Between September 1st, 2008, and February 28th, 2009, the stock market lost over 40% of its value. The drop offered a potential opportunity to buy low but instead many panicked and sold.
How do you break the cycle? Discipline and sound advice may help. Don’t get greedy when the market rises and don’t panic when it falls. Stay balanced. Stay diversified and stay patient and you may potentially come out on top.
Call today and let us help you create a sound investment strategy.