woman working on finances

Aside from being inspired by a certain punk rock hit from the early 1980s, the title of this article is also the big topic of 2020 and going into ‘21. It’s a question coming from those who have money they’d like to invest, and from those who already have investments to worry about.

We, as a society, revisit the topic of rising and falling markets every few years, especially when the economy is especially volatile or the economic climate is relatively unknown. People start asking questions and we even see investors and bankers asking the question, do we sit on our investments? Is it time to take a risk and buy? What do I need to do to protect my investments? Should I be selling all my stocks in case things crash? These are all good questions, but if you’ve got money invested it’s good to ask these questions on a regular basis, and not just when the country is on the verge of change.

Also, none of these specific questions are actually the goal of today’s post, and maybe that’s going to be a new source of frustration for you, but as a bank that’s been around for over 135 years, and seen many rises and falls, we can honestly say that quick decisions, while necessary, are not the key to longevity in the financial world. We don’t always have the answers, but we can offer products and services that are designed to guide you to financial success over time.

How does that tie into rising and falling markets?

Studies show that investor behavior can do more damage to portfolios, and the market, than actual economic changes. Investors frantically trying to guess what’s going to happen, and then making quick decisions has a direct impact on whether or not the markets themselves are crashing or growing. Obviously, we see the results of these emotion-based decisions in a wildly fluctuating cycle of lows and highs, which is both stressful and maybe not even that beneficial to your portfolio in the long-run. There’s even a book about the phenomenon, entitled “The Behavior Gap, Simple Ways to Stop Doing Dumb Things with Money” by Carl Richards.

His theory is that the return you get on your investment is actually lower whenever you’ve been making quick decisions based on your emotions. If you’re moving money around a lot to avoid the pain of the rising and falling market you’re potentially doing yourself a disservice, in addition to making a lot of extra work for the person conducting the trades. That could be you, or your investment officer.

So, how do you avoid being affected by this phenomenon called the Behavior Gap?

The best, simplest way to avoid being affected in the long-term is to use the services of a trusted investment advisor who can help you form a plan and then stick to it. They can also assist you in making sure you’re not making decisions based on emotions, and guide you toward long-term growth. It’s quite literally their job to watch the markets, look for opportunities and guide investors through the very long process of building wealth. You can, of course, conduct your own research and learn more about buying, selling and trading, but if that’s not something you’re particularly interested in it’s much safer to bring in a professional to assist.

The other key to escaping an emotional mishap is in changing your mindset. Start saving early, as much or as little as you can. The goal is long-term stability, not a “too good to be true,” get rich quick solution. The old adage, “if it sounds too good to be true, it probably is” is about as close to the truth as you can get when it comes to money. And nobody knows that better than an institution that’s been around since 1884, or a band called The Clash whose hit “Should I Stay or Should I go” peaked on the charts at number 45. And it didn’t really get big attention until it was used in a commercial for Levi’s blue jeans in 1991. It became a chart-topping single nearly a decade after its original release. In 2009, nearly thirty years after its release, it was ranked number 42 in the 100 Greatest Hard Rock songs by VH1.

Should I stay or should I go now?

If I go there will be trouble.

And if I stay it will be double.

So you gotta let me know, should I stay or should I go?

Based on these last few lines of the song The Clash didn’t really ever get an answer to their question either, but it’s clear that sometimes success takes some time and a little patience.

Should I Stay or Should I Sell?
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