Paws for thought

Paws for thought

17 September 2020

How our instinctive behaviour towards market volatility is seemingly like raising a puppy

I have always been a “cat person”. I had a pet cat for most of my childhood, and it wasn’t long after Jimmie and I bought our first home together that we welcomed 2 kittens into our home. Whilst Jimmie loves our cats, I knew that he desperately wanted a dog, and so I resounded to the fact I’d probably have to cave in at some stage.

Fast forward approx. 8 years and I began to come around to the idea of having a canine ‘furbaby’, though not without careful consideration, endless research and many discussions. The time finally came, and we welcomed little Bonnie into our lives earlier this month. We were prepared. We’d planned. We had a very excited two-year-old boy who couldn’t wait to play with her! Everything was going to be great…

What we couldn’t plan for, however, was the fact that poor Bonnie had some minor health complications in her first week with us. We were back and forth at the vets, we were picking up about 10 poos a day, mopping up little accidents on the floor and trying to find food that would agree with her. Day to day we were struggling. However, we persevered and kept thinking about the big picture and why we got a dog in the first place. A few weeks later, we have a happy, healthy pup and a toddler who absolutely adores her. We know it won’t be plain sailing all the way but will remind ourselves of the lovely play times, walks in the park and snuggles, especially on the days when things get overwhelming.

It’s natural to look at the short term and feel disheartened when facing day to day struggles. Keeping our minds focused on the benefits Bonnie will bring to our lives in the long-term, is helping us manage the short-term hurdles.  

Likewise, in the case of market volatility, it is so easy to see the days where the market appears at its lowest and feel that the best thing to do would be to escape it all. Behavioural economics tells us that in times of uncertainty, we revert to our primal instincts and think quickly, act rashly and avoid perceived risks.*

It is far more beneficial, however, to approach periods of market volatility with a clear mind and to consider the long term, not just the graphs presented to us in the media. We need to recognise that risk is an inherent and important part of investing. When you consider day to day fluctuations in the stock market (or the days of visiting the vet and cleaning up accidents), it can sometimes feel like you’re struggling. But what helps us to reach our longer-term goals is to keep in mind the bigger picture and remember “this too shall pass”.

So, whether your long-term goal is to retire a few years earlier, pass money onto your children, or, in our case, make lasting family memories with our new furry addition, try not to let the daily ups and downs get in the way of achieving them.

By Amy Joseph

Sources

*https://www.fidelity.co.uk/markets-insights/markets/global/market-volatility-what-do-now/