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With a lack of clarity still in the financial forecast, this article spotlights two fear and greed-based biases you will want to be aware of, so you can learn to not only manage them, but to also put more focus toward the long-term success of your investments.READ THE ARTICLE
Since 2020, U.S. investors have navigated their way through an uncertain economy, market and political landscape. During this time, those who remained focused on technical signals and monetary stimulus found prosperity. On the other hand, those who enveloped feelings of fear and greed found themselves bound by emotional bias, and ultimately, making financial decisions that hindered their overall financial wellbeing.
Understanding your reaction to the unknown: With a lack of clarity still in the financial forecast, this article spotlights two fear and greed-based biases you will want to be aware of, so you can learn to not only manage them, but to also put more focus toward the long-term success of your investments. They include:
📌 Availability bias – Fear and market crashes: Any historic market crash spawns fear for the future, and while you cannot predict when a crash will happen, there are ways to quantify the risk of and conditions leading into one. Learning to properly manage your risk level is key, while putting too much emphasis on the risk itself can blind you from opportunities to compound wealth.
📌 Herd mentality – Greed: At market peak, extreme optimism often surges so high amongst news outlets and Wall Street analysts that you might fail to appreciate risk – and instead – follow the herd for fear of missing out.
Consider this: What would it mean for you to straddle fear and greed? In my opinion, this sounds like someone who is cautiously optimistic, and I bet that person has a financial plan prepared to succeed – no matter what happens next.