Staying Calm, Even if Markets Aren’t

Matters of money can pull at both our intellect and our emotions. And when markets get shaky, that’s when the internal tug-of-war kicks into high gear. Two investment pros share strategies for keeping calm and investing on.

It’s easy to focus on the negative. In fact, it’s the human tendency. We see some of this manifesting in markets today. After a swift and strong run for equities since the COVID-crisis lows, some investors are turning their attention to what can go wrong.

Yet there’s still plenty to go right. That’s according to international equity investor James Bristow and Morgan Housel, author of The Psychology of Money. The two recently got together for a robust conversation that not only considered the potential bright spots in the outlook, but also the lessons to be gleaned from the pandemic and how to balance the emotion and science of investing.

When it comes to maintaining perspective and ensuring your emotions don’t lead you astray when markets get choppy, they offer this advice:

Have a plan

All of us, whether individual or professional investors, should have a forward-looking plan, says Mr. Bristow. It should consider “here's what I'm trying to achieve, and here's what I would do in certain circumstances.” Having a well-thought-out plan should provide guardrails and offer some measure of solace, forestalling emotional reactions when markets get dicey.

Yet it’s also important to get comfortable with the idea that not every scenario can be foreseen or planned for. A once-in-a-century global pandemic is a prime example.