How To Stay Calm In A Crisis | Investing With IBD | Summary and Q&A

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May 15, 2023
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Investor's Business Daily
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How To Stay Calm In A Crisis | Investing With IBD

TL;DR

Learn how to stay calm and make unemotional investment decisions during crises, as advised by an experienced wealth advisor.

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Questions & Answers

Q: How does the wealth advisor manage to stay calm and unemotional during financial crises?

The financial advisor attributes his ability to remain calm to gaining more experience over time and gradually reducing emotional responses to market events. Age and decreased testosterone levels might also contribute to a calmer approach.

Q: How does the wealth advisor advise clients who feel anxious during market turmoil?

The advisor reassures nervous clients by discussing the defensive positioning of their portfolios and the long-term perspective. He emphasizes that market downturns often present buying opportunities and reminds clients to trust their judgment and expertise.

Q: How does the advisor handle clients who want to switch to safer investments during crises?

The wealth advisor respects the client's wishes and reminds them of the long-term plan. If a client insists on a defensive move, the advisor may suggest short-duration treasury bills as a temporary solution until they regain confidence.

Q: How does the wealth advisor deal with market sell-offs and dislocated stocks?

The wealth advisor takes advantage of dislocated stocks by investing in names with strong fundamentals. He advises clients to focus on the long-term story of the stock and consider buying opportunities rather than panicking.

Summary & Key Takeaways

  • Remaining calm during a crisis is challenging, but it is essential for making rational investment decisions.

  • Emotions tend to influence younger investors more, but with experience, one can learn to navigate market volatility calmly.

  • It is crucial to build a defensive portfolio and have a long-term goal in sight to weather market sell-offs.

  • During the COVID-19 pandemic, the wealth advisor had difficult conversations with nervous clients but emphasized the importance of staying invested and avoiding emotional decisions.

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