In a Financial Upturn, Recovery of Mindset Is Most Important
Between October 2007 and March 2009, the U.S. stock market plummeted 55 percent. And during this time, as noted by Jason Zweig in The Wall Street Journal, the vast majority of 401(k) investors made no adjustments to their portfolios.
And then, in early March 2009, some of these “sitting bulls” finally bailed from the market as fear reached a fever pitch and some experts were warning that the next big drop was just around the corner.
Those people missed a rebound of more than 40 percent in recent months.
Victims of war and natural disasters suffer from Post-traumatic Stress Disorder (PTSD), an emotional illness that develops as a result of a terribly frightening or very unsafe experience. People with PTSD will avoid places, people, or other things that remind them of the event. The fear may be irrational, but is very real to them.
The trauma in the markets has caused a pandemic of Financial PTSD these days, and it may take a while for many investors to recover. Others will behave as if they have financial schizophrenia or bipolar disorder — erratic investing decisions without a lot of rhyme or reason or facts.
It’s time for recovery — in the markets, yes, but even more a recovery of our mindset, where facts and rational thinking prevail. Some investors will emerge stronger and more empowered — and much wealthier in 10 years — while others may not recover in their lifetimes. They will wither from a so-called “financial mental illness”: irrational and uninformed thinking that is tainted by days gone by.
The winners in this recovery will:
Get educated: They continually grow their knowledge about investing alternatives, and they act on that knowledge. They take advantage of technology and web tools to reduce risks, spot trends, and eliminate middlemen.
Be open-minded: They are willing to consider that the rules, risks and opportunities are different from 15 years ago.
Take charge: They feel personal responsibility for their own financial well-being, rather than blindly trusting in others.
Live a whole life: They know how to make money and how to live wealthy. They invest in the companies, the communities, and the people who are making the world a better place. They use their money to follow their dreams and to leave a legacy.
Opening the door to this kind of life is the reason for WEALTH magazine. By giving you a working knowledge of the main sources for wealth today, we give you the power and confidence to act. Then we take you into that final frontier, where wealth and fulfillment co-exist peacefully.
Tags: emotional attitude, market psychology, recovery, STOCK MARKET