by
Stacy Wise
| May 17, 2023
Do Not Get Emotional With Your Investments
Written by Rick Imhoff, CFP®
The following are two paragraphs from an article I wrote a year ago:
“It’s a new year with a whole new set of circumstances. A story that repeats itself on a regular basis every single year, usually with similar results. We began 2022 with a peak in COVID cases, inflation reaching levels not seen in over 30 years, supply chain issues, the Federal Reserve preparing to begin a series of increases in interest rates as early as March, and now the Russian invasion of Ukraine.
It is critically important to not try to time the market or make emotional investment decisions based on the news of the day. It is almost always a bad idea. The problem with trying to time the market is when exactly do you get out and when exactly do you get back in? Including professional money managers, no one is smart enough to consistently know when to buy and when to sell. Making emotional decisions is worse than market timing because it has no basis in proper market analysis. You just get this feeling and you either go all in or get completely out.”
So, here we are a year later. You do not hear much about COVID, the supply chain issues seem to have been mostly resolved, inflation may be beginning to level off, and the Fed may be nearing a point where they may soon pause in raising rates. Russia and Ukraine are still fighting and some new issues with that conflict have developed.
What is new now is the heightened tension with China, concern about a recession in the near future, and the so-called banking “crisis” which now seems to not have been a crisis after all. To quote a friend, “it’s always something!” As I wrote a year ago, it is a story that repeats itself on a regular basis with similar results. You may have noticed, we made it through the last twelve months, and we will make it through the next twelve months. It can be difficult at times, but you need to stay focused on your long-term investment objective.
Once again, it is important not to get emotional about your investment decisions. You should not allow the media, who look for ways to increase readership or viewership, or politicians, who look for ways to get more votes in the next election, cause you to overreact due to their effort to sensationalize events for their gain. As we have seen over the past several months, opportunities presented themselves to improve the yield on fixed-income securities and to buy stocks and other assets at lower prices. Other opportunities will present themselves this year. We would be happy to help you discover those opportunities and keep you on track to achieve your financial and life goals, while overcoming the desire to make decisions based purely on emotion and the “crisis” of the week.
Rick Imhoff, CFP®, is Executive Vice President & Senior Trust Officer for MidAmerica National Bank. He can be reached at (309) 647-5000, ext. 1130 or by email.
Investments are not FDIC-insured, hold no bank guarantee, may lose value, are not a deposit, and are not insured by any federal government agency.