We all make decisions every day and we don’t have all day to make them. Sometimes people make decisions without taking time to consider all the information that’s available, relying on instincts and experience to make the right choices.
In the high-stakes world of investing, information overload can be part of the landscape, especially for new investors in wide-open financial markets that are full of options and limited on time. They consider stocks, bonds, real estate and other opportunities, making decisions on stories that stand out with a sense of excitement, and they risk hundreds if not thousands of dollars on their potential.
Bright, shiny objects with trendy names like cryptocurrencies, meme stocks, SPACs and NFTs can be eye catching, especially within the hyperbolic atmosphere of social media, news show banter and advertising.
The phenomenon was in full display during the pandemic when millions of people with extra cash and time on their hands stepped into markets as though they were walking into shopping malls, investing in opportunities they thought would deliver big results in a hurry. And thanks to a sustained period of accommodative monetary policy from the Fed and market growth, many speculative assets succeeded.
So for nearly two years, we watched advancing markets achieve all-time highs on a regular basis as new investors facing thousands of options grabbed hold of momentum plays touted by the media and discussed in nearly every watercooler conversation in America.
Eventually the bull market that sprung to life amid the pandemic ended, leaving some to wonder what went wrong while more circumspect investors were glad they resisted the temptation to buy these riskier assets.
And headwinds continue to develop. Our economy has weakened under the weight of high inflation, our supply chains continue to falter, the war continues in Europe and interest rates are rising. Times like these illustrate how a diversified and disciplined investment plan can keep us on course through the big gains and losses that are inherent in financial markets.
Rest assured, there will be another mania down the road fueled by historic capital flows. Amid all the modern flurry of media hype and emotion, it’s hard to ignore the fear of missing out. But sticking to an investment strategy is important. And, for those who don’t have strategies, there are financial advisors who can help.
In the uncertain world of financial markets, there is one thing we can count on – the dramatic ups and downs will continue. Investing with emotion will eventually carry us into rough waters but investing with a plan is much more likely to keep us on calmer seas.