Fear and Investing

Among the many different emotions human beings experience throughout our lives, fear just might be the most unique and intriguing. In our hunter and gatherer days, a healthy sense of fear was likely extremely beneficial in keeping us out of harm’s way. However, although we now rely on supermarkets rather than woolly mammoths for our sustenance, that sense of fear can still dominate our lives.

Nowhere is this notion better exemplified than in investing. The markets don’t naturally lend themselves to the squeamish and faint of heart, displaying stretches of volatility that can make even the most well-seasoned investors want to grab a parachute and jump out of the metaphorical plane.

To the average investor, who might lack the thorough perspective and financial history of a well-seasoned investor, abiding by the buy-and-hold strategy that is preached from many a mountaintop – particularly in the face of choppy financial seas – can feel like the ultimate masochistic endeavor.

However, as queasy and anxiety ridden as the markets can sometimes make you feel, maintaining an appropriate psychological and emotional approach will always be to your benefit, especially in the face of overwhelming fear.

Keep an Open Mind

In this dynamic and demanding world, society can feel like it’s capable of stepping over a cliff at any given moment. Although we certainly live in trying times, life has always been challenging, no matter the time or place. In the modern era, the specific brand of fear created by the investment markets is, to a large extent, created by a lack of control and an unknown future.

The great unknown has always been a constant, however, including in even darker hours over the past century, so remembering that both societies and financial markets have been able to withstand countless catastrophes in the past to only rebound should help put your investing fears in a proper perspective.

Dampen Your Fears with a Group Think Approach

In any regard, including investing, fear can be blinding and prevent you from making sound decisions. That notion is precisely why emotions can still dominate the markets, even with our sophisticated analytical and technological advancements in investing.

For that reason, when fear rears its ugly head and just the thought of your investments triggers insomnia, it might be best to prevent yourself from making rash decisions by seeking the counsel of people you trust – including your financial advisor, spouse, or others that might have a different perspective on current market trends. Such guidance might include strategic solutions to your fear like better diversifying your assets, revisiting your allocation, or dollar cost averaging into the market rather than diving in head first.

Ultimately, if after seeking the guidance of those trusted individuals, selling some shares and heading for the hills still seems like a wise decision, then so be it. However, relying on others to see through the blinders placed by fear can help navigate you through even the most volatile of waters without severely impacting your financial well-being.


About Jeremy

Jeremy Wallace is founder and chief investment officer at Wallace Hart Capital Management, an independent financial services firm committed to offering comprehensive advice and customized services. Jeremy has 20 years of experience in the financial industry and is passionate about helping clients preserve and enhance their wealth so they can pursue their passions. Jeremy graduated from Emory University with a degree in international economics and a certificate in financial planning. Outside of the office, Jeremy spends most of his free time with his wife, Julie, and their three children, Isabel, Lincoln, and Reid. He is an avid Chicago Cubs baseball fan, and  he enjoys golfing with his wife and traveling with his family. Learn more about Jeremy by connecting with him on LinkedIn.