Crises Force You to Examine Your Behavior
The investment markets are complex, full of ups and downs and events we cannot predict or control. A financial crisis can feel like an erupting volcano that disrupts our sense of security. Our first impulse is to grab all our money, hold it in our arms, and run briskly to safety, preferably to some dark quiet place where no one can find us.
The panic of the crisis can prompt varying reactions. Some investors have adopted an all or nothing approach. They think that by doing “nothing” with their investments they can avoid a crisis. Other investors assume a crisis will occur no matter what, so why worry about it? Why not just throw something in every direction?
Neither of these approaches is realistic or ...