Do you know what to do in a bear market?
Maybe you’re feeling like you’re missing out on the opportunity to invest and make money. Maybe you’ve been waiting for the perfect time to jump on the market, but it’s not happening.
I’ve got some advice for you: don’t change your strategy just because of what’s happening in the stock market.
This week’s episode is about staying the course and finding success by ignoring your first instinct to run.
I thought it was such a good story. I need to share with you again, it’s called what not to do in a bear market.
With camping season here and summer holidays planned. I think it might be a great time to share this story with you. And it’s a little bit timely right now because we are in a bear market – that bear means standing on his legs, growling and sparking fear in the markets. So this story is from a few years back and it’s because my family and I have always headed out west for our annual camping trips.
And Fernie has been one of our destinations. For many years, we’ve kayaked the elk river and enjoyed the great hiking trails in August. The berries are always ready and can be found everywhere. One early morning on one of these trips. My husband, Ian and I had settled on a hike choosing the path that followed the raspberry bushes with our heads down, picking berries, enjoying the solitude of the morning.
We came face to face with a big brown bear. Let me pause here and just give you some background. I’ve lived in Northern Saskatchewan and I’ve enjoyed many outdoor experiences and canoe trips. Canoe trips with the family, with my daughters. I’ve taken them through the boreal forest full of wildlife, and many bears.
This isn’t new to me. I have prepared myself and my family for what to do if we encounter bears on any of our adventures. So with that said the bear and I had a stare-off, and then I did the opposite of everything I know. I ran. My husband told me at the time he called it a George Costanza. I went right past him with a shrill shriek coming from my throat.
You might ask, Zena, what is a George Costanza? Well, I’m dating myself here, he’s a character from the nineties television show, Seinfeld. He was often driven by impulse and pure emotion from what I can remember. And that ended up creating a lot of chaos or trouble for this character. And the episode that I know Ian was referring to was the one where George flees a burning kitchen, knocking over several children at a birthday so he could escape first.
Not a compliment here for myself. Now, I didn’t knock Ian over while I escaped, but I did pass him in a very brisk jog. He had to yell my name and tell me to stop running. Luckily that bear didn’t chase us and he scampered in the opposite direction. After a lot of teasing by my family and retelling of my George Costanza reaction, I realized that my response to take flight was a normal impulse.
However, our first instinct is not always the right one. I see the similarity in my behaviour to that of the emotion we let take hold of us when making financial decisions. I knew exactly what I was supposed to do, but George Costanza took over and all rational thought went out the window. I know that our behaviour is one of the most important variables in our long-term results.
We would not be human if we did not have the flight response to fear, but the key is to listen to the voice of rational thinking. I won’t tell you to throw your backpack away from you back away slowly or play dead. But I will tell you as your financial advisor to stay the path. And I will point out all of the rational thoughts that lead us to our decision-making.
I have noticed that my clients have not followed my George Costanza move by running during a time of emotion or crisis, especially right now in this fear-mongering market, news, you name it. We’ve got a crisis every day. It seems like you can find success by staying the course with your finances.
There’s a quote “wealth isn’t primarily determined by investment performance, but by investor behaviour.”
That’s all I wanted to leave you with today. The story of what not to do in today’s bear market.
Thanks for joining, talk next week.