That said, several clients were in a full-blown panic. They were watching their investments fall in value, they were losing money and, well, there was (is) a global pandemic. It was scary! Each time I spoke with a client, I immediately had to vibe where they were on what I call the “risk spectrum.” Were they ready to sell everything and move into a bunker? Were they ready to “buy the dip?” Understanding where you sit on this spectrum will be very helpful for you as an investor and as a human.
Knowing where you fall on this spectrum is important, but it should not be the deciding factor in making investment decisions. For example, as a young trader on Wall Street, I used to trade small amounts to get a better understanding of how markets work — I figured that if I risked small amounts I couldn’t hurt anyone! I learned very quickly that taking short-term risk was not for me. I could not stand losing money. I would get sweaty, not be able to eat my lunch and eventually exit the position because I couldn’t take the heat.
