Fear and Greed: The Never-Ending Cycle of Investing
We usually avoid repeating topics we’ve covered before, but this time, we can’t resist. The point of this article is simple: Human nature never changes. When it comes to investing, people constantly swing between Fear and Greed.
The Emotional Rollercoaster of Investing
From our 50+ years in the markets, we’ve seen it happen over and over again. People buy when stocks are rising because they’re afraid of missing out (greed), and they sell at the first sign of a downturn (fear). This behaviour leads to poor investment decisions, and in extreme cases, financial ruin.
The renowned psychologist and Nobel Prize-winning economist Daniel Kahneman extensively studied this phenomenon. He demonstrated that investors often make irrational choices due to emotional biases rather than sound reasoning. When markets are rising, greed pushes people to invest without considering fundamentals. When markets drop, fear makes them sell in panic, locking in losses that could have been avoided.
This cycle has repeated itself throughout history. No matter how much financial education is available, many investors still let emotions dictate their decisions rather than sticking to a solid, well-thought-out investment plan.
The “End of the World” Narrative
There are lots of articles and noise out there, proving that people are worried—about Trump, Musk, a possible U.S. recession, world war threats, and European rearmament. If you consume daily financial news, you might think we’re on the brink of catastrophe. Yet, when we zoom out and look at market performance, reality tells a different story.
While the media constantly discusses risks and worst-case scenarios, European stock markets have actually outperformed U.S. stocks over the past three years. Yet most people don’t even notice. Why? Because fear dominates their thinking.
Let’s look at the numbers:
Over the past three years, the German DAX (representing Europe) has outperformed the S&P 500 (U.S.).
Over five years, they’re nearly identical.
Over ten years, the U.S. has done better, but that’s expected given historical trends.
The lesson? Diversification matters. If you only focus on U.S. stocks, you might overlook opportunities elsewhere. And if you rely solely on financial media for investment decisions, you could be misled by short-term noise instead of long-term trends.
Are We Really Facing Another Collapse?
Some voices out there argue that history is repeating itself, comparing today’s situation to the fall of the Roman Empire. They claim that financial markets and economies inevitably crumble under the weight of global events. One reader wrote:
“An empire is ending, and when an empire ends, the same things always happen. This time, it’s the same.”
Is it, though? Does it really make sense to compare modern financial markets to 378 AD? Or even to 1929? Think about it:
Was there the internet in 1929?
Did a central bank like the Fed exist as it does today? (No)
Were markets as developed and liquid as they are now? (Not even close)
Were pension funds constantly buying stocks every month like today? (No)
Markets evolve. Human nature stays the same, always fearing the worst. But economies, businesses, and financial systems adapt and grow. The companies that dominate today’s stock markets—Apple, Microsoft, LVMH, Novo Nordisk—are vastly different from those of past decades or centuries. They continuously innovate, pivot, and find new ways to grow despite global challenges.
“I Haven’t Sold Yet… But Can I Hold On?”
One investor said:
“For now, I haven’t sold anything, but will I be able to resist?”
My guess? He won’t. When panic sets in, many investors give in. But successful investing requires the opposite—staying the course even when fear takes over.
Another admitted: “I sold some of my equity ETFs even though I expected you to criticize me.”
This is classic emotional investing. He lightened his positions not because of a well-researched strategy, but because of fear. And while every market downturn feels “different”, the end result is always the same—those who stay invested come out ahead.
If we look back at market history, temporary downturns are always followed by recoveries. Selling during uncertainty usually means missing out on the rebound. Investors who panic sold in 2008, 2020, or even 2022 regretted it later when markets surged back up.
The Importance of a Long-Term Plan
A solid financial plan helps you stay focused on long-term goals rather than short-term fears. Yet, many investors don’t have a clear investment strategy. Instead, they react emotionally to market movements, increasing their exposure when stocks are high and reducing it when stocks are low—the exact opposite of a winning strategy.
At JA Group we help clients track their portfolios daily, showing:
Net returns after contributions and withdrawals.
Performance relative to their personal goals, not just a generic benchmark.
Historical impact of past investment decisions to provide a full picture.
This data-driven approach helps investors stick to their plans rather than making impulsive decisions based on fear.
Focus on What You Can Control
You can’t control:
The economy
Global politics
Market volatility
But you can control:
Your investment behaviour – Avoid panic selling.
Your long-term plan – Stick to the strategy designed to reach your goals.
How you react to market fluctuations – View downturns as opportunities, not threats.
One reader summarized it perfectly:
“Nothing really changes. Markets move in cycles. Staying invested leads to real results.”
The Truth About Investing
But after 50+ years in the markets, we’ve seen too many investors make the same mistakes over and over again. We don’t sugarcoat the truth. Our mandate is to educate and guide you—even if that means telling you things you don’t want to hear.
So here’s my final message:
Avoid emotional investing
Stick to your long-term plan
Control what you can
Ignore the noise
Because, as our U.S. colleagues say, “This too shall pass.”
KISS: Keep It Simple, Stupid
Our KISS strategy (Keep It Simple, Stupid) is superior to any short-term trading tactic, investment bank report, or sensationalized financial news article. The principles of sound investing haven’t changed:
Stay diversified.
Stick to your strategy.
Ignore market noise.
If you do this, you’ll be ahead of most investors who constantly react to fear and greed.
Final Thoughts
We are committed to helping investors make rational decisions, not emotional ones. Our mission is to educate, provide clarity, and reinforce the importance of long-term, disciplined investing. We may not always succeed in convincing everyone, but we will never stop sharing the truth.
Stay focused, stay invested, and remember: This too shall pass.
