Staring at the Market Syndrome

Amar Pandit , CFA , CFP

Have you ever found yourself staring at the TV screen/mobile news and felt the urge to Sell? 

Now have you ever found the urge to Buy after looking at news?

If you are human like all of us, the answers to both these questions is a YES. The more we look at the news or stare at the screen or even talk to an enthusiastic friend who indulges in market timing/astrology, the more we feel like selling /buying.  In short, we simply feel like reacting.

This is what I call as Staring at the Market Syndrome. This one syndrome makes us to do some really stupid things.

Think about it. 

You start on your investing journey with enthusiasm. The market corrects. You are fine. The noise gets louder. You start to panic. Then the noise is at its loudest (Remember February – April 2020). You want to rush out of the stampede before the house is on fire (so you think). This is thanks to a small part in our brain called the Amygdala (more on this in a later post). 

So, what do I do in such situations?

  1. Have a plan of action in advance. By a plan I do not necessarily mean a complex plan. I simply define my actions well in advance and automate them, so they execute without my permission. Think about it. Can you really take a sound decision when you are emotionally distressed? I cannot and I bet it is the same for most people except super humans. There is no need to display heroic behaviour of taking decisions in stressful situations. Sign the Ulyssesan Contract before you Invest
  2. Think about opportunities to capitalize during the fall. 
  3. Not look at the Screens /Headlines screaming gloom and doom.
  4. Ignore the Predictions and focus on my economy, my needs, and my plan.
  5. Have awesome tea and conversations with clients, and team members.
  6. Write
  7. Read and Reflect.

Finally, I never interrupt compounding but grab these opportunities if I have liquidity else, I just relax and sit comfortably knowing that this too will pass (and that the rewards for not interrupting compounding are way higher than the alternatives).

A Warren Buffett quote is warranted here “Only buy something that you are perfectly happy to hold if the market shut down for 10 years”.


P.S. You do not Sell when the media tells you to or staring at the market causes you to. You sell when you need the money that you have set aside for your needs and goals. There is a plan for selling as well, which you need to define right at the start when you invest. I have done a post on this but will do a new one soon.