We are the Risk

With all the dire headlines we've been reading, one might assume that the biggest investment risks today are geopolitical tensions, inflation and interest rates, or the recent market downturn. However, the real threat isn't any of these factors. The primary investment risk today—and always—is ourselves. In Warren Buffett’s 2024 letter to Berkshire Hathaway shareholders, he stated, "It’s individuals that make investments risky."

 

Why We Are Our Biggest Risk

 

Our own human nature makes investments risky. It's the way we're hardwired to react to various geopolitical, economic, and market events. These reactions are often knee-jerk, hasty, and filled with emotion. Such impulses are natural and largely unconscious, but that doesn't mean we should act on them. We need a plan—a game plan for how to react.

 

A Reactionary Game Plan

 

For investors, constantly bombarded by fluctuating markets and ever-changing, sensational headlines, it can be challenging to avoid hasty reactions. Here are three steps to help investors respond more rationally:

 

1. Recognize Emotional Influences: Acknowledge how strong emotions like fear of loss and fear of missing out affect you. What do these emotions make you want to do?

 

2. Pause and Reflect: The next step is to stop. Do nothing. This is difficult but essential.

 

3. Seek Guidance: Contact me to discuss your concerns and feelings. Together, we can navigate these emotions and ensure that any investment decisions align with your specific plan and most important objectives.

 

Investment advice offered through OneAscent Financial Services, LLC, d/b/a Provident Oak Financial, LLC, a Registered Investment Adviser with the United States Securities and Exchange Commission. Registration as an investment adviser does not imply any certain degree of skill or training.