Climbing a Wall of Worry
Updated: Oct 6, 2021
It is often said that stock markets climb a wall of worry. This makes sense since historically the market has gone up and there always seems to be something to worry about. 2021 is no exception. Year-to-date, the S&P 500 is up over 10%. Strong stock performance despite the Delta variant, extreme political partisanship, debt and inflation concerns.
Investors worry about volatility, and we even worry when there isn’t volatility such as in 2017. Absence of volatility may make us concerned about complacency or what we might be missing. In other words, there is always a reason for investors to worry about something.
Worry is an interesting concept. Present worries trump anything in the past because we are living and working through it. The uncertainty and anxiety are felt today. This may cause us to overweight current concerns and result in a myopic, rather than long-term, view of the future. For long-term investors, it is advantageous to maintain a long-term perspective.
Concerns – Past & Future
What did investors worry about in 2019? How about 2018? The stock markets were negative in 2018, so we probably worried a lot. But we can’t remember. That is because worries tend to work themselves out. We adapt and adjust to our changing circumstances, especially the bad ones.
What will we worry about next month or next year? It could be a continuation of present concerns, or it could be something entirely different. But it will be something!
In my experience, I have seen that investors who focus on the “worry of the day” experience greater stress and are more likely to make an unwise investment decision. Worrying is part of the markets. It’s not worth the psychological or financial cost.
If you have any concern, please let me know. One of my greatest values is to help you know what is worthy of your attention and concern and what should be ignored.
©2021 The Behavioral Finance Network. Used with permission.