Many of us have experienced market swings, minor ones keep happening all the time. These are mainly ripple effects of major ones or sometimes do point to an upcoming major swing but you only see it when looking from a wider perspective.
How does market swings affect us? Especially mentally and emotionally? Floating in space at one moment and being deep inside the Earth at another moment. Can we become comfortable with this swings? Is it even possible? Let's dig in and find out!
Market Euphoria
Almost everyone is an expert in a bull market. Drunk with the projections of an increased asset valuation and green ticks everywhere. We say ridiculous and illogical things with little to no sense behind them.
Mentally, people like me will be making some math calculations in their head, thinking about all the things they can do with the profits (vacation is always one of them), marveling at how much of a genuis we are. Even smart people fall for it because it's just human nature.
I had a buddy of mine who in traditional terms is labeled a smart person. When the previous bull market happened, he was so happy that he thought about doubling his investment. He already had more. But he wanted more and more! At that time, we're already on the moon. I guess he wanted the market to zoom into the stars!
With market euphoria, most people say and do crazy things. Emotions are very contagious and it's hard not to get carried away. Remember the time when people sold their valuables just to buy crypto? What a story it was.
A Punch In The Face
All that goes up must come down.No matter how much of an experience in market swings someone has. They're never looking forward for a freefall. Although, it's easier to get wealthy at that time because everything is on sale at a discount price. But you're hardly ready for it. How hard it's going to crash is unknown and when it will reach the actual bottom.
Seeing a red color has some strong psychological effects, add money to the equation and emotions become unduly magnified. Nobody wants to take a loss even if it's at least temporarily. That's just how we're wired by default. Yet this is what happens in a bear market, everything is in the negative.
Some dwell on the loss and let it take a hold on them. Others reminiscent about the bull market and hope it will come back soon. And there are a few, who'll try doing anything they can to recover their losses. Here, I'm in the hope for a bull market camp, I yearn for it.
To me, doom and gloom seems to be more contagious that a 'market euphoria'. Fear is a basic and intrinsic emotion. Whether for good or bad, it can take on huge proportions when activated inside you.
The Cycle Continues
It never stops. When an upswing happens, we're ecstatic and we do big crazy things. When the downswing comes, we do the opposite. Only to be followed by an upswing again and we repeat the big crazy things but in a different time scale. This is eventually followed by another downswing. The cycle just keeps going while most of us get emotionally carried along with it.The key to being comfortable with it is to remain unfazed by it. I know it's easier said than done but it's possible. We just have to make the decision not to allow ourselves to be overly infected with market sentiments.
Thanks for reading!
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