Did you attempt to login to your trading platform on the morning of August 5, 2024?
You probably heard about the “Global Sell-Off” in one way or another – maybe from the news channel you watch each morning, your social media feed, or even a conversation at the water cooler with your “expert” co-workers. Wherever you heard it, you might have promptly tried to access your investment account(s), only to encounter an “Unavailable” error message (even “scheduled maintenance” verbiage lol) on platforms like Vanguard, Fidelity, ETrade, Charles Schwab, or Robinhood.
It’s moments like these that highlight the importance of having a trusted advisor, especially one who operates under the fiduciary standard. Unlike the often-impersonal nature of online trading platforms, a fiduciary advisor is legally obligated to act in your best interests, providing a level of personalized service and expertise that can be invaluable in times of market volatility.
When markets get turbulent, like during the recent sell-off, many retail investors feel an immediate urge to react – often fueled by emotions rather than sound strategy. This reaction is simply a reaction and is not typically based on any merit. This particular sell off could be related to multiple instances, including the MAG 7 as discussed in our previous ‘Think This, Not That’ e-newsletter (top 7 stocks in the S&P 500 that made up over 35% of the index – now less than 30% as of this post due to the sell-off), the most recent jobs report, the Japanese Yen (huh!), or a combination of all. Regardless, reacting without merit can be contributed to decisions driven by common behavioral biases, such as herd mentality and loss aversion.
Herd mentality can cause investors to follow the crowd, often leading to buying high and selling low. It’s easy to get swept up in the panic when you see everyone around you reacting to market news. However, this reactive approach can be detrimental to long-term investment success. Your advisor can help you avoid this pitfall by providing a steady, informed perspective, encouraging you to stick to a well-thought-out investment plan rather than making impulsive decisions.
Similarly, loss aversion can drive investors to make poor choices out of fear of losing money, even when sticking to their plan would likely yield better results in the long run. This bias often leads to selling investments during a downturn, locking in losses rather than riding out the storm. It’s important to manage your emotions, receive reassurance and guidance based on your INDIVIDUAL financial goals and risk tolerance.
On August 5th, while many retail investors were frustrated due to being locked out of their accounts and unable to act on the market chaos, our clients could rest easy. Even though they faced the same login issues, our team had full access on the institutional platform and continued to manage client accounts seamlessly. This level of service and reliability is part of what sets a fiduciary advisor apart.
If you’re looking for a trusted partner to help you manage your investments and navigate the ups and downs of your emotions, consider working with a fiduciary advisor. Our team is here to ensure that even when the unexpected happens, your financial future remains on track.
