Sometimes investing is easy, sometimes it is more difficult. The last decade, except for a handful of temporary corrections, has been relatively easy. It consisted of very low interest rates, low inflation, and lots of fiscal and monetary stimulus. And stock markets were quite positive. Since 2009, the S&P 500 annualized nearly 16% (1).  So long as investors didn’t bail during one of the temporary corrections, they did quite well.

Decision-Making Under Uncertainty

Investors face a very different environment today. While the future is always uncertain, today’s environment may be even more uncertain, given the trajectory of inflation, interest rates, and fiscal and monetary policy.

Making good decisions is always desirable. But when we face greater uncertainty, it is important that we trust whatever decision we make. A decision that looks to be “bad” in the short term can be quite profitable in the long run, and vice versa. So, how can we develop greater confidence in our decisions and trust them, even when they may not look so great in the short run?

Three Steps to Trusting Your Decisions

1. Take Your Time.  It is normal and natural to react to things based on emotions and intuition. The brain wants to solve things quickly, so we need to engage the reflective part of our brain by not reacting hastily and seeking additional information.

2. Gather Information. We should spend a significant chunk of our time gathering information, including contradictory information. This helps us see things from various points of view rather than the loudest, or most repeated, viewpoints.

3. Talk It Out With Us. We are here to help you gather information, ask the right questions, and have a thoughtful discussion. Helping you think and talk through these times of uncertainty is the among greatest value we can provide you.  

We cannot control nor predict the markets, and that is OK. Because we can control how we think, analyze, and respond to the markets. We have found that how investors respond has a significant impact on their ultimate results. We are here to help you obtain the best results, despite challenging markets.

©2022 The Behavioral Finance Network. Used with permission.

(1) S&P 500 Index from 01/01/2009 – 12/31/2021 with dividends reinvested. The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. All indices are unmanaged and may not be invested into directly.