Have you heard the term “behavioral economics”?
One example of behavioral economics is when, all at once, everybody starts spending their money on the same thing. This is otherwise know as “crowd behavior” and it usually does not end in good results for the crowd.
What happened last week in the stock markets is a classic example of behavioral economics.
Immediately following the election, everybody started investing in the same things. When the markets reopened on the morning after the election, specific sectors of the market that have been lagging all year started to turn positive, because now—in light of Trump’s policies—they should be favored during Trump’s administration.
Fluctuations in the market are normal surrounding major events such as a presidential election, and no doubt there will be changes ahead when our newly elected administration swears into office—but a wise investor knows he cannot let events, even major events, dominate his investment decisions. A wise investor knows to remain aware and informed, but steady and consistent. A wise investor knows not to follow the crowd—because elections, natural disasters and other news flashes happen everyday, all over the world, and he can’t change his mind every time public opinion wavers.
Are you second guessing your investment portfolio post-election? Chances are, you should continue to stay your chosen course.
But if you need a professional opinion—or a boost in confidence—don’t hesitate to call us at 800-300-3684 or send us an email at askdoug(at)dougfabian(dot)com. We understand the feelings of uncertainty after an event as important as our recent presidential election. With our investment knowledge, we can help you combat second-guesses with logic, planning and a clearly defined path for your money.
Contact us today for a personal consultation!