Fight, Flight or Freeze

Ever wonder how our innate human tendencies are involved with our investment process? If you look at them closely you will recognize how we behaved over our history really has a lot to do with how we invest.

I didn’t say that this was necessarily a good thing.

Social scientists and researchers that study the brain repeatedly point to our consistent behavior when threatened. We all suffer from a fight, flight or freeze response.

Actually however, this is not in random order. In fact it’s quite linear. In other words to start with

• We freeze. At the first sign of trouble, rather than run and alert that saber tooth tiger to our whereabouts, we do nothing.
• Then we run. Once spotted, when the danger is evident, it’s in our nature to flee to protect ourselves.
• We fight typically only when we have no other choice.

Now doesn’t that sound to you just like what investors do? The market takes a massive downturn and the first thing that we all do is freeze. We don’t want to sell when it’s down so we hang in there to ride out the storm.

When things get really rough however you start to see investors bail. In the back of their minds they’re rationalizing that they can’t afford to see any further losses but they actually end up guarantying their losses by cashing in when the markets down.

Finally we see the fight reaction. This doesn’t occur to often with a properly diversified portfolio. You do see it often however it in privately held situations where the owners of an asset are so heavily invested in it that they start to squabble amongst themselves often to try and rectify a situation that had really nothing to do with any of them.

So when you see yourself doing the same thing, question it. If markets are down dramatically and high quality shares are trading in some cases for 25% of their previous value, is it really the time to do nothing?

E.O. & E.

About The Author

Mark Schneider
Mark Schneider is one of Canada's leading Chartered Financial Planners. For over 30 years he has helped hundreds of regular Canadian families grow small fortunes through consistent planning and wise advice. He holds the following designations: CFP, CLU, CHFC, CFSB

Get ready for your new life. It’ll be a great ride!

OUR

MA Scheneider

Perspectives Articles

Schneider Insurance Update

The stock markets have continued to move considerably higher since our...

SCAMS, SCAMS, SCAMS AND MORE SCAMS

Watch this 30 second video, and then read the rest of the article. &nb...

WHAT CANADA NEEDS TO PROSPER

Government tax revenue (when not wasted) is what builds countries into...

Schneider Insurance Update

Despite a terrible fall season in both stock and bond markets, we’ve...

SCHNEIDER INSURANCE UPDATE

Stock markets have managed to move ahead moderately this year but appe...

THE 100X INCREASE IN FRAUD

One of the areas we watch with interest and concern is fraud and the i...

We Celebrate Savers

At M.A. Schneider Insurance, we believe the saver deserves to be celebrated.

After all, it’s the saver that is conscientious every day to gradually create wealth for all.

That habit not only creates security for them but for their families and for the community as a whole.

We think they sometimes lose sight of how important they are.

This blog is here to help them. To help inspire them to stay the course and ultimately lead the great lives that they deserve.

Here’s What to Expect

1. Insight we gather about what’s going on that may affect the long-term quality of your life…

While there is a lot on the Internet, we know that making the best decisions for your life is often based on knowing just what your options are.

2. We hope that understanding what’s going on will help with perspective on what you can do.

3. New innovation and resources you can seek out.

This blog will offer an insight into the future because whether we like it or not, we’re going there. We’ll do the research to find the innovations that you should know about.