The Investor Behavior Cycle

Human nature does not change. Going back at least to the time of Moses we see humans letting their emotions getting in the way of sound decision making. The Israelites were slaves in Egypt for hundreds of years and saw miracles from God that led to their release from Egypt. Not too long after gaining their freedom, Moses’ people soon began to grumble at the discomforts of their situation and began questioning God and His power.

Human nature does not change. Throughout history we see the emotions of people clouding judgement of large groups of people. In our own lives we can probably think of a time or two (or thirty) where we let our current situation overshadow the big picture and our ability to rationally analyze the situation. This is just the way we are wired.

Human nature does not change. This is especially true when it comes to investing. Time and time again we see the emotional roller coaster above repeat, which causes investors to lose sight of their long-term prospects. Most of the time this leads to missing the majority of the bull market gains and participating in too much of the bear market losses.

Human nature does not change. Strategic Equity’s core mission is to help investors overcome their emotions. From our mechanical trading systems, to the design of each investment program, to our Risk & Objective questionnaire, to customized allocations to those investments, all the way to our communications, our goal is to provide our clients and advisors the tools necessary to not fall into the viscious Investor Behavior Cycle.

Human nature does not change, but we can overcome it.