MAB Quarterly Review Q1 2025 - Adventurous - Flipbook - Page 12
Investment insights
The cycle of emotions: it is natural to feel fear and greed during
your long-term investment journey
Successful long-term investing is about staying the course. It is about keeping a steady hand during market
turmoil and not succumbing to the allure of the negative commentary that mainstream media bombards us
with.
The market cycle is a journey through the different facets of human emotion, from excitement to fear, and all
the nuances in between, shaping our investment decisions and behaviour.
The chart shows a stylised representation of the different types of emotions you may have felt or be feeling,
in your current investment journey. The most important takeaway message here is the cycle of emotions, and
the market cycles, have constantly repeated over time. If you are feeling anxiety over your investments now,
you will likely feel optimism at some point too. This will repeat, not always at the same pace, but inevitably
the market and your emotions will 昀氀ow along this path.
It is ironic that the points of maximum 昀椀nancial risk and maximum 昀椀nancial opportunity coincide with the
opposite emotion. When you are feeling most euphoric, that tends to be when the markets are high and have
experienced a sustained move upwards. Your valuation may have increased, most of the news 昀氀ow is positive,
and it feels like the current cycle will continue inde昀椀nitely. This is arguably the point of maximum 昀椀nancial
risk; markets could be stretched, and forecasts may be overoptimistic. Nevertheless, you must keep to your
investment plan and not become greedy.
The opposite scenario is when markets are falling, you may feel panicked, and fear is the overriding emotion.
This is a point of potential maximum opportunity, as markets could well be low, and most of the news 昀氀ow is
negative. You could also feel pressured into making long-term investment decisions that are counterproductive
to your long-term plans. This is the time to seek reassurance and guidance, to keep you aligned to your longterm plan and goals.
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