... and how to navigate today’s volatile markets.
Let's face it—investing these days feels a bit like riding a roller coaster blindfolded, doesn't it? After years of helping people navigate the ups and downs of the market, we’ve noticed three big mistakes they often make, especially in wild markets like this.
Grab your coffee, hot tea, or zero-sugar soda, and let's discuss keeping your investments on track even when the market seems to have other plans.
1. Emotions taking the wheel
A common question we receive is: "With all this craziness, when's the right time to jump in?"
It's a fair question! Especially when the market is bouncing around like a pinball. But here's the thing—when our emotions start making our investment decisions, we usually get it backward.
Think about it. Fear makes us sell when prices drop (exactly when we should be considering buying), and FOMO (fear of missing out) pushes us to buy when everyone's celebrating high prices (precisely when caution might be smart).
Warren Buffett says about this: "Be fearful when others are greedy, and greedy when others are fearful." In plain English: when everyone's panicking about tariffs and selling, that might be your opportunity. When everyone's celebrating, maybe take a breath before diving in.
Bottom line: Your emotions will always try to hijack your investment decisions—especially when panicky headlines are flying. Recognize those feelings, but don't let them drive your financial car.
2. Trying to time the market
We've all thought about it: "If I just sell before the next drop and buy right before things go up again..." Seems logical, right?
But here's the reality check—even the pros struggle to get this right.
Just last month, we saw sectors that analysts thought would get hammered by tariffs bounce back within days, while supposedly "safe" industries took unexpected hits from supply chain problems. Who could have predicted that?
A great quote from Peter Lynch really hits home here: "More money has been lost preparing for corrections than in the corrections themselves."
Here's something wild to consider: If you stayed invested in the S&P 500 from 2001 to 2024 (through some truly scary times like the 2008 crash and the pandemic), you'd have averaged about 8.42%1 returns annually. But—and this is huge—if you missed just the 10 best days during that entire period, your returns would take a massive hit.
And guess when many of those "best days" happened? Right after some of the worst drops or following major policy announcements that initially scared everyone. Talk about terrible timing!
Bottom line: Instead of trying to outsmart the volatility and news, focus on staying in the game. Think of it like swimming in the ocean—you can't control the waves, but you can learn to ride them out.
3. Misjudging how much turbulence you can handle
We all like to think we have nerves of steel, right? But there's nothing like a 1,000-point market drop in a single day to test that theory!
Many investors discover their true risk tolerance only when they're watching their portfolio drop by thousands of dollars in real-time. Suddenly, that "aggressive growth strategy" doesn't seem so appealing.
Risk isn't just some theoretical concept—it's that knot in your stomach when markets tumble. And that feeling changes throughout your life.
When you're 30, you theoretically have time to recover from market swings. But if those wild fluctuations keep you up at night or, worse, push you to make panic decisions, then maybe your actual risk tolerance isn't what you thought it was—regardless of what some textbook says about your age group.
For those looking for a bit more stability in these choppy waters, something like the MBA Income Fund—which has delivered steady returns through decades of market drama—might be worth considering.2
Bottom line: Be honest with yourself about how much market drama you can really handle. There's no medal for taking on more risk than you can stomach.
Remember… you’re the captain of this ship
Markets will always have their wild moments—that's just their nature.
But here's the good news: how you respond to all this noise is far more important than the noise itself. Stay cool when others panic, stick to your plan despite the headlines, and consider diversifying your investments and keeping your focus on the long-term.
1 https://www.officialdata.org/u...;
2 Past performance is not indicative of future results.
This information is not legal, financial, or tax advice. Information is from sources deemed reliable. Information is subject to error, omission, withdrawal, or change. Contact your own legal, financial, or tax advisor before taking any action.
