In a bear market it can be impossible to escape the pervasive negativity. Not only will our portfolios be falling in value, but there is likely to be an incessant flow of news highlighting the harsh realities of the prevailing backdrop. Dealing with this is not just an uncomfortable experience, it changes how and why we make investment decisions.
Our ability to make consistent and considered choices can quickly be overwhelmed by the negative emotions we experience; be it fear, panic or anxiety. It does not matter how many charts of past market declines we have seen; it won’t appropriately prepare us for the challenges of a severe bear market. It is critical that we don’t ignore the emotional demands of investing through such exacting market conditions.
There are three pivotal means by which the emotions evoked during a bear market can lead us astray:
More here – Behavioural Investment