Investing is about balancing emotion and objectivity

 

In the last year most of us have spent a lot more time in front of our screens for work, school or entertainment. An interesting by-product is that investors have become increasingly aware of the news and its effect on the markets. Already in 2021, retail investors fought back and squeezed short sellers and crypto currency again surged in popularity. Both events grabbed daily headlines and the curiosity of investors.

 

It has been a great example of the human behaviour element of investing. Fear and greed have been on full display. This can then be seen in the media and heard in conversations between investors and advisors: Did I own any GameStop? Why didn’t we buy Bitcoin?

 

There will always be opportunities, trends and fads. A smart investor should know their risk tolerance and overall goals so that they can move quickly to pursue something that interests them. At the same time, there will also always be “noise” in the news that will cause uncertainty and that is what creates risk and opportunity in markets.

 

Knowing when to leap and when to stand back is complex. An advisor can navigate these decisions with you by contributing deep knowledge of the markets, reflecting how historic activity affected returns, providing a full range of options to shift and rebalance investments, and managing debt and savings to meet their client’s goals. They will be a rationale voice to help to separate the emotion from these decisions.

 

Most importantly, an advisor stays objective when the ‘noise’ makes it harder for investors to keep calm and carry on.