Chill about investment panic

Alook at the approach that leads to decent returns while keeping it in check.

- Marius Fenwick

All investors suffer from investment anxiety. The trick is to discover what triggers these feelings and at what level they are awakened. Similarly, where investment returns move upward and downward around the mean, anxiety can be experienced during market cycles when returns turn negative and during bull markets when markets turn positive.

When anxiety occurs when markets provide consistent positive returns, it is mainly because "not enough" returns were experienced. Just like emotions drive investor behavior (fueled by fear and greed), anxiety is caused by the same emotions:

Fear of loss causes anxiety when markets turn negative or when a market correction is anticipated after a strong run. Market news and anticipated market adjustments are significant drivers that cause investment stress.

Remorse/anxiety occurs when returns are lower than the market has produced. Generally, this can be attributed to greed.

The fear of loss has a much more significant emotional impact than the anticipation of gain.

I am fascinated by how investor behavior changes during different market cycles. I find it entertaining when markets swing between negative and positive and back to negative again and witness how investors' risk profiles change.