Active Management: A Potential Cure for the Volatility Blues?
Active Management: A Potential Cure for the Volatility Blues?
Active Management: A Potential Cure for the Volatility Blues?
Even when markets seem to be steadily climbing, investors can find it difficult to maintain the discipline required to stick with a long-term investment plan. When markets become volatile, that discipline can be even more challenging.
Market volatility can challenge even disciplined investors, especially when it triggers emotional reactions. People often value stability and predictability, and during volatile periods, fear of loss can overwhelm the desire for gains. This natural tendency, called loss aversion, makes investors more sensitive to losses than gains. Unfortunately, during times of market turbulence, the constant barrage of media warnings and expert predictions can push people to make impulsive decisions, which often undermine their long-term strategies.
Despite common fears, market volatility is not inherently bad. In fact, market corrections are vital for the health of the stock market, acting as a …