In the world of investing, it’s not uncommon for emotions to run high, especially during periods of economic uncertainty. When financial markets experience turbulence, investors may find themselves grappling with stress and anxiety. Unfortunately, these emotions can lead to hasty decisions that may not align with long-term goals. Explore the potential consequences of such panic-driven reactions, with a focus on the recent events in the US markets and the possible impact on investors who are seeking confidence in their financial future.
The Challenge of Economic Anxiety
Economic stress and anxiety are common responses to uncertain financial climates. Many investors, eager to have confidence in their financial future, may feel compelled to take action in the face of adversity. However, it’s important to recognize that acting on impulse can lead to missed opportunities and hinder progress towards long-term goals.
The US Markets: A Mixed Bag of Success and Missed Opportunities
The US markets in August 2023 exhibited relative stability and even growth year to date, with the S&P 500 dropping 1.4% in August, bringing its year-to-date gains through August 31, 2023 down to 18.8%.1 Second-quarter earnings have been mixed, as many companies may continue to struggle with the rising costs and the possibility of a US economic downturn.1 However, despite this overall trend, many individuals striving for a prosperous retirement and an improved standard of living may feel they’ve missed out on the benefits. One reason? Large outflows of equities in August may have led to missed opportunities for families looking to capitalize on the market’s resurgence.2
The August Exodus: What Went Wrong
August witnessed a notable shift in investor sentiment and a significant withdrawal from the equity markets. Unfortunately, this panic-driven response may have led many families to miss out on a substantial market comeback. According to Refinitiv Lipper data, US equity funds saw a net $11.07 billion worth of outflows during the week of August 25, 2023, the largest since June 21, 2023.2 The consequences of this decision can be far-reaching, potentially impacting a family’s abilities to achieve their financial aspirations.
The Importance of Informed Decision-Making
In times of economic stress, it’s crucial to approach financial decisions with a clear and informed perspective. According to Mark Matson, Founder and CEO of Matson Money, “It isn’t as simple as creating an efficient portfolio because when it comes to a lifetime of investing, guiding investors to stay disciplined and focused on their long-term goals is not always easy.” Mark is the visionary behind the Matson Method, which integrates leading research in behavioral economics, finance, neuropsychology, and the field of human performance studies into an innovative investing science. That’s where an advisor coach comes in – someone who’s trained in applying the Matson Method and employs cutting-edge coaching strategies to powerfully develop investors to be prudent and disciplined over a lifetime.
Strategies To Consider Moving Forward
- Maintain a Long-Term Perspective: Remember that investing is a marathon, not a sprint. Short-term fluctuations are normal, and maintaining a focus on long-term goals is often key to long-term wealth creation.
- Diversify Your Portfolio: A globally-diversified portfolio can help disperse risk and minimize the impact of market volatility.
- Get Trained and Developed: Attend educational events like the one Matson Money hosts, the American Dream Experience. Learn about economics and investing, engaging yourself in a profound exploration of your financial future.
- Get an Advisor Coach: Having a financial advisor as a coach can provide valuable insights and help you make informed choices that align with your long-term goals.
While economic stress and anxiety can be formidable adversaries, they need not be insurmountable. By approaching investing with a measured and informed mindset, investors can navigate through uncertain times and work towards fulfilling their dreams. Remember, it’s not about avoiding challenges, but about facing them as a disciplined and prudent investor who can create a strategy for long-term success. If you’re committed to creating a life of freedom for you and your family, you may be interested in attending the American Dream Experience, a two-day investor education event where participants have an opportunity to discover empirically tested academic investing principles that can help give them confidence in their long-term investing strategy.
This content is based on the views of Matson Money, Inc. This content is not to be considered investment advice and is not to be relied upon as the basis for entering into any transaction or advisory relationship or making any investment decision.
This content includes the opinions, beliefs, or viewpoints of Matson Money. All of Matson Money’s advisory services are marketed almost exclusively by either Solicitors or Co-Advisors. Both Co-Advisors and Solicitors are independent contractors, not employees or agents of Matson.
Other financial organizations may analyze investments and take a different approach to investing than that of Matson Money. All investing involves risks and costs. No investment strategy (including asset allocation and diversification strategies) can ensure peace of mind, guarantee profit, or protect against loss.
Investors cannot invest in a market index directly, and the performance of an index does not represent any actual transactions. The performance of an index does not include the deduction of various fees and expenses which would lower returns.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS
1. September 2023 Stock Market Forecast. September 1, 2023. https://www.forbes.com/advisor/investing/stock-market-outlook-and-forecast/
2. US equity funds see biggest weekly outflow in two months. August 25, 2023. https://www.reuters.com/markets/us/us-equity-funds-see-biggest-weekly-outflow-two-months-2023-08-25/