How to tackle fear as an investor?

How to tackle fear as an investor?

By Christian Gattiker, Head of Research at Swiss Wealth Manager, Julius Baer.

Greed and fear rule markets, they say. While both are met with unease, greed gets much more attention than fear. Yet fear is frugal, fair, and forceful. Since fear is your first line of defence as an investor, you should be able to deal with fear and take the heat – while getting paid for doing so. There are three strategies for tackling fear: rationalise it, ignore it, or embrace it.

In a state of fear, the body activates many stress hormones. Even in smaller doses – when fear somehow nags you – it feels all the more uncomfortable and wears you out over time.Christian Gattiker, CFA, CAIA, Head of Research

1. Rationalise fear by looking at the risks versus the rewards

As John Wayne once said, “Courage is being scared to death… and saddling up anyway.” It may make it easier to be courageous when you get a better grip on the danger by putting it into perspective. In doing so, we use rationality to contain the raging angst. In financial markets, rationalisation is a lot about measuring what the crowd is doing and determining what are the benefits.

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