The Cycle of Investor Emotions Chart provides an example of how some investors react to the ups and downs of the market. Humans are emotional beings and decisions we make are often clouded by the feelings we have. Disciplined investing requires investors to follow an unemotional plan. By combining the cycle of investor emotions with the recent market we hope to illustrate the value of using a manager with a quantitative approach to risk management.
How to Use the Chart:
We hope this tool will be valuable in helping to manage client expectations. While the market tends to go up over the long run, the "ups" and "downs" along the way often cause investors to give up at the wrong time. By combining this with our Bear Market Chart, investment professionals should be able to educate clients about potential market risk.