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  • Writer's pictureBrock Williamson, CFP®

The Preeminent Investment Risk

With all the dire headlines we have been reading, one would think the biggest investment risk today is geopolitical concerns. Or inflation and interest rates. Or even the recent market drop. But the truth is that it is none of those things.  


The preeminent investment risk today (and always) is ourselves.  In Warren Buffett’s 2024 letter to Berkshire Hathaway shareholders he said,  


“It’s individuals that make investments risky.” 


Why We Are Our Biggest Risk 


It is our human nature, the way we are hardwired, that makes investments risky. We make investments risky because of how we react to various geopolitical, economic, and market events. Reactions are often knee-jerk, hasty, and emotion filled. 


These reactionary impulses are both natural and largely unconscious.  But that doesn’t mean it’s good to act on them. We need a plan. A game plan for how to react. 


A Reactionary Game Plan 


For investors, constantly bombarded by fluctuating markets and ever-changing, sensational headlines, it can be very difficult to not react hastily. To that end, I provide the following three steps that can help investors react more rationally. 


  1. Recognize how strong emotions like fear of loss and fear of missing out influence you. What do they make you feel like doing? 

  2. The next step is to stop. Do nothing. This is difficult, but essential.  

  3. Contact me.  Let’s discuss your concerns and feelings. I will help you get through it. Together, we can ensure that any investment decisions you make are in line with your plan and long-term objectives. 


©The Behavioral Finance Network 


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