We’ve all experienced it.
When our investments go up, we feel good.
When our investments go down, we feel bad.
While discussing the dangers of investments going up may not seem relevant, it is important to talk about how it impacts our mindset.
When our investments go down, we want out. When our investments go up, we want more.
When we want more, we tend to stop caring as much about the risks we are taking on. We care less about diversifying our investments. We feel invincible.
It is important to remember we’re not and keep a level head.
Good times and bad times are both normal parts of any market cycle or the life of any company. Just because a particular stock is shooting out the lights right now doesn’t mean it always will. This is why we diversify.
Too much euphoria can leave us vulnerable to taking more risks than we should. Diversifying when times are bad and good can ensure we stay along for the ride to long-term financial success.
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