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Cycle of Emotions and Cycle of Financial Market
Posted by:   |  Nov 05, 2010

The effect of our financial situation and monetary wealth on our well-being is well documented. Today, more than ever, we are impacted by the volatility of market situation and its uncertain performance and even its direction.

Normally, after a period that market was moving south, when the market starts moving up, we start feeling sense of hope. While the market continue going up, we feel relief and later optimism, excitement that can reach even euphoria. After a period that the market was moving north, when the market starts moving down, we start feeling the anxiety builds up. When it continues going down, we might be in denial. The feeling might later evolve to fear, panic and even depression.

As such, we cannot overstate the importance of keeping our emotions in check when it comes to the ups and downs of our wealth. We must be aware and accept our difficult emotions when our investment goes through loss in short run, while keeping our focus steady on managing assets and investment with a long term perspective. At times of financial gains, while we acknowledge that a strong rally could continue, it is important to understand that the risks at those times are real and significant. The key to managing the emotions created by the short terms results is to stay focus on the fundamental investment and management strategies which consider the long term objectives.

More than ever, I believe that working with professionals is important to make informed decisions. To reduce uncertainty and risk, using a conservative approach is necessary.  A conservative approach will also prove itself prudent one over time and more importantly will provide piece of mind, and improve our well being and quality of life. If one decides to take high level risk, they might gain high return, but at the same time might suffer high loss. The key guideline to well-being is to make knowledgeable decision while understanding its consequences and implications to our life (considering financial, emotional and other relevant factors).

 

Please visit author, Moshe Ratson at his Google+ Profile:+Moshe Ratson 



Licensed Marriage and Family Therapist (LMFT) in New York City
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