Financial markets can be quite scary at times. Headlines like ‘$50 billion wiped from the ASX’ can make it difficult to stay the course and remain invested when shares are going up and down like a yo-yo.
First-time investors tend to sell when the market falls out of a fear it will continue to go down and never return.
Research shows people feel the pain of losses twice as much than the enjoyment of profits. It’s our fight-or-flight response, the amygdala part of our brain kicking into overdrive to avoid the potential for loss.
People don’t like uncertainty and will avoid risks if possible.