Emotional Investing Pitfalls

Matthew Allgood |


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In recent times, the surge in market performance has sparked a familiar wave of FOMO—fear of missing out—among investors, compelling many to rethink their strategies in pursuit of higher gains. Historical patterns reveal a tendency for households to shift significantly towards equity securities during these bullish phases, often driven by the allure of immediate returns.


However, this shift frequently coincides with market peaks, followed by downturns, highlighting a common pitfall: poor timing. The core issue lies not within the market's ebb and flow but in the abandonment of disciplined investment processes amidst market noise.


We emphasize the importance of our RiskFirst® process, designed to foster discipline and mitigate impulsive decisions. Our approach aims to safeguard your investments by prioritizing risk management and maintaining a strategic focus, regardless of market environment. Remember, the key to successful investing is not chasing the stock market but adhering to a principled strategy that aligns with your long-term objectives.


Emotional Investing Pitfalls

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Source: Bloomberg, Redwood. Data as of 3/21/2024. Date Range from 9/30/1954 – 9/30/2023.



Allgood Financial

Disclosure: This piece is for informational purposes only and contains opinions that should not be construed as facts. Information provided herein from third parties is obtained from sources believed to be reliable, but no reservation or warranty is made as to its accuracy or completeness. Charts and graphs are for illustrative purposes only. Discussion of any specific strategy is not intended as a guarantee of profit or loss.  Past performance is not a guarantee of future results. The objectives mentioned are not guaranteed to be achieved. Investors cannot invest directly in any of the indices mentioned above. RiskFirst® is a registered trademark of Redwood Investment Management, LLC.


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