401k Life Planning Retirement

Five Ways to Get Over Knee-Jerk Reactions to Changes in the Stock Market

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The way you think about the market is your market psychology. People often become afraid that they will lose all their savings when the market drops. You very well can lose out if you react every time there is a dramatic change in the market. 

The key is to think long-term. Don’t invest if you can’t stay in for 5, 10 or 20 years. If you need it back in two years, the stock market is not the place for your money.

Learning how the market works can reduce the number of surprises and increase your success. All assets rise and fall in value; it’s the nature of the market.

For market success, develop your awareness and work with a financial professional for sound advice and investment guidance. Participating in the market has its ups and downs, but when you compare non-participation with the right guidance and mindset, the probabilities improve.

Here are five ways to get over going into high anxiety every time the market makes a change:

1. Look at Both Monetary and Non-Monetary Costs

Monetary costs are transaction and brokerage fees. Index funds, and exchange-traded funds have minimal fees are considered “passive investing.” Non-monetary costs include the time you spend learning about the market and understanding the investment process. Managing the emotional shifts between increases and losses are also non-monetary.

As in the past, today’s portfolio needs the assistance and watchful eye of an experienced market professional. It’s not enough to guess or even estimate market changes – planning is necessary to anticipate what will happen.

2. Long and Short-Term

Volatility is the nature of the market. Our emotions share a similar reaction between excitement and depression. We get surges of pleasure with favorable uptrends and neurotic negatives with declines. 

Both the short and long-term matter – they both play a vital role in learning how market shifts affect your choice.

  • Long-term is noted for continued performance and consistent results.
  • Short-term focuses on temporary boosts or downturns in market. 

3. Market Awareness

To become more knowledgeable, start with your financial characteristics: what segments of the market will work best for you. It takes an honest assessment of your knowledge, means, and objectives. For this reason, working with an experienced professional is beneficial – they will help you tolerate the emotional and financial ups and downs.

There are two main market trends – bear and bull. In bear markets, prices fall. Investors get the urge to sell. Bull markets are steady and confident; prices go up and allow rational decisions to buy or sell.

4. Manage and Control

Unfortunately, emotions can be drivers for selling early (short-term), diminishing significant gains (long-term). As we go through various phases in life so does the market. On the average upswing, markets have a lifespan of five years. It doesn't mean earnings stop entirely – but they could settle in with a slower and more steady growth.

For this reason, diversification and multiple selections are necessary for a healthy portfolio. 

5. Take a New Perspective

When we don’t experience success immediately, our mind begins to associate financial markets with negative emotions. Acknowledge that the market is not just about winning and losing – it’s about strategy and duration.

The market will continue to go up, go down or stay the same. Talking with a market professional helps to manage your emotions and the market's pluses. Working with a financial advisor could change your perspective and broaden your future's outlook. Schedule time to talk at:


This content is developed from sources believed to be providing accurate information and provided by Kelly Financial Planning. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.