Have you ever noticed that most of the people who forecast what the stock market is going to do predict that it will either crash, or at least go down sharply? Even when the stock market’s going up there are people who predict the market’s next move is down and that it’s time to head to the sidelines. The fact is that fear sells, that’s why so many prognosticators emphasize the negative.
Of course they have something to sell that will “protect” you from the upcoming catastrophe. If they scare you witless they will sell you gold, annuities, structured products or their newsletters.
It’s easy to be fearful when markets go down and you see the value of your portfolio decline. If the decline is sharp, investors get frightened. If the headlines scream of financial doom, people can panic. To help you cope when fear hits, here’s a list of “worry traps” that you should recognize. Worry traps are phrases that you will recognize because you have heard most of them before. They are part of the playbook that doomsayers bring out to frighten you. Here are four examples:
Most people are psychologically drawn to these common traps. It’s scientifically shown that people withdraw money from their investments at market bottoms and buy at market tops – selling low and buying high. That’s where an experienced financial advisor is worth their weight in gold. They know these traps and how to avoid them.
Arie J. Korving, a CERTIFIED FINANCIAL PLANNER™ professional, has been delivering customized wealth management solutions to his clients for more than three decades. Prior to co-founding Korving & Company, he was First Vice President with UBS Wealth Management and held management positions with General Electric.