Post-Financial Crisis Mind-Sets

Dan Kutzke By | On September 13, 2018

As we look back 10 years since the stock market crash in 2008, T. Rowe Price identified “4 Post-Financial Crisis Mind-Sets” in their Fall 2018 “T. Rowe Price Investor” newsletter I thought I would share with you. It stresses the need to develop a long-term plan and to stick to the plan in times of crisis. Following are the four mind-sets:

Too Cautious – Those who exited the markets in 2008 and are still too fearful to get back in.

Market Watching – Those who focus on what the markets are doing in the short term (and not the long-term performance of their own portfolios) and react to headlines by constantly adjusting their investments.

Enticed and Chasing – Those who think they know better now yet still keep chasing the next big thing, whether it be tech stocks, real estate, gold or cryptocurrencies.

Complacent – Those who assume stocks are supposed to keep rising steadily and have allowed themselves to remain too heavily exposed to stocks despite a shorter time horizon and the risks of short-term volatility.

Many investors experience these mind-sets from time to time. What sets some apart is that they also know how to stick to their plan despite these emotions.