Nobody can predict the market’s next move, but you can control how you react. This video explores how emotional investing leads to poor decisions and how a calm, strategic approach fosters long-term success.

Hi everybody. It’s Paul Sydlansky, founder of Lake Road Advisors, and welcome to episode number nine of the Build our 24 part planning series where we take you through from start to finish, what it’s like to go through the planning process with Lakewood Advisors. In today’s episode, we’re going to focus on investing and specifically really the emotional side of investing and why it’s important to keep your emotions out of your investing process. We’re going to talk about three things to consider next time you think about your investment plan.

The first thing is no one knows where the markets are headed. Right now, it’s a very turbulent time in the world where we have the war in Ukraine, we have markets that are plunging here to start 2022 – the stock market and the bond market – and things seem pretty bleak. But what I can promise you is nobody knows where the markets are headed – not the experts, not the pundits, and taking the time to try to figure it out, in our opinion, is a waste of time.

If anybody were to look back to March of 2020 and think, okay, this is a great time to invest in the market, that was the start of the 30 plus percent drop in the US market as Coronavirus spread throughout the world. Now, in hindsight, it was an incredible opportunity because the market finished up over 16% that year and was up again over 27% in 2021. So when you think you know where the market’s headed, I promise nobody knows. Don’t try to guess. It’s a waste of your time.

The second thing to consider is that trading or actively buying and selling actually reduces your performance over the long term. It’s been proven in multiple studies that the investors who trade the most actually underperform investors who buy and hold or do not try to jump in and out of the market. Trying to time it is really, really difficult and is going to lead to underperformance. So the second fact to consider when you’re thinking about investing or when there’re turbulent times in the market, remember, the more you trade, the worse your overall performance will be.

The third fact I’m going to leave you with to think about when you’re investing or thinking about maybe making a change to your portfolio is there has yet to be a recession or a depression that the markets have not come back from. We’ve seen world wars, we’ve seen pandemics, depressions, recessions. We’ve rebounded from all of them. Now, we don’t know how long it’s going to take, but if you believe in capitalism and the long-term growth prospects of the economy, we will come out of it. It’s really understanding how much tolerance you have to ride the down slope and be able to take advantage of when the market goes up. Remember, over time, the markets average in US markets average 8 or 9% up per year, but you’re going to have down years and that’s normal. Understanding that markets go up and down and drops are a normal part of the market cycle, should only help you weather the storm and keep you from making bad decisions when markets are down.

If you have any questions about investing in your portfolio, please don’t hesitate to reach out and ask. We’d be happy to help. If not, we look forward to seeing you at episode 10 of the build.

Lake Road Advisors, a Fee-Only, independent financial planning firm with offices in Corning, NY, Ithaca, NY and Portland, OR works with clients virtually all across the country. Paul Sydlansky, the founder of Lake Road Advisors LLC, has worked in the financial services industry for 20+ years. Prior to founding Lake Road Advisors, Paul worked at Morgan Stanley in Manhattan for 13 years. While at Morgan Stanley, Paul was a senior-level manager within the Institutional Equities Department. In 2018 he was named to Investopedia’s Top 100 Financial Advisors list. Paul received a Bachelor’s degree in Economics from Marist College and holds an MBA from New York University Leonard N. Stern School of Business. Paul is a CERTIFIED FINANCIAL PLANNER™ and a member of the National Association of Personal Financial Advisors (NAPFA) and the XY Planning Network. They can be reached by phone at the Corning, NY office at (607) 438-2914, Ithaca, NY office at (607) 463-8400, or Portland, OR office at (607) 292-2172 or at the firm’s website at https://lakeroadadvisors.com/

The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.