How we react differently about market gains and losses

In my experience, investors often react differently to market fluctuations. We tend to focus on absolute dollar during downturns but percentage gains during rallies. This is termed as "loss aversion"—the pain of losing is felt more intensely than the joy of gaining. Despite the emotional impact of market lows, it’s interesting to note that historically, the market has been up 80% of the time over the last 35 years.

It helps to have a long-term perspective to counteract the psychological bias towards loss and encourage more rational investment decisions. This is why many people buy when the market is going higher and sell when the prices are on a decline.

There is a saying in our industry that the bear market ends, when the last bull goes home . Being aware of these psychological tendencies and adjusting investment strategies accordingly, we can better navigate the ups and downs of the market, aligning our actions with our goals instead of the fluctuations in the market.