Littlejohn Financial

Mind Over Market

True Wealth Podcast - Financial Podcast by Financial Advisors

The news can trigger emotional responses that shift how we view the market. How does group psychology affect the market? What we do know is the lemming scrum is often bloody and one you want to avoid, so tune in and learn how discipline can help you avoid following others into a financial pitfall.

In this episode, you will learn the following:

  • Negative news influences investment decisions: Humans have a natural bias towards negative news, and this has an impact on the stock market. When negative news is released, it can cause investors to make decisions based on fear or uncertainty, which can lead to market fluctuations.
  • Importance of Time Horizon in Investment: Underscores the significance of understanding the time horizon for an investment. The time horizon can affect the type of risks an investor is willing to take and can influence the potential return on investment.
  • Distinction between investing and trading: While investing generally involves a longer time horizon and is based on a company’s fundamentals, trading typically involves short-term strategies aimed at profiting from price fluctuations.
  • The Impact of Fear of Missing Out (FOMO): Fear of missing out can lead investors to make hasty decisions, often leading to financial loss. This phenomenon, also known as the lemming mentality, can drive investors to jump on the bandwagon without proper analysis or consideration of the potential risks.
  • The Importance of Investment Discipline: Emphasizes the importance of discipline in investing, advising against chasing performance or getting caught up in groupthink. Having a disciplined approach can help investors avoid common pitfalls and stay focused on their long-term financial goals.
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