Amid stock-market ups and downs, wise investors avoid ‘emotional circles’: Endowus CEO
- Choosing stocks without a long-term plan leaves investors ‘at the whims of the market, of that company, or of that CEO’, says Gregory Van
Investors must learn not to panic and to invest based on evidence and a long-term outlook rather than on “emotional whims”, according to the head of digital wealth manager Endowus.
To avoid being “thrown into emotional circles” during market turmoil such as the world saw in recent weeks, investors must understand their investment horizons and their goals, said Gregory Van, co-founder and CEO.
“Behavioural finance plays an enormous role in long-term success as an investor,” he said. “But in order to control your behaviour, you need to understand how the markets work. You need to first understand the financial science – the evidence for why a basket of assets will appreciate over time and why it’s suitable for the purpose of your investment.”
“When things start to go sour, [the market] unwinds on itself extremely quickly, faster than anyone can really control,” Van said.
This is why personal goals and the intended duration of one’s investments are crucial to determining which assets are suitable.
“Simply owning a stock or owning a cryptocurrency or owning a single bond or a small basket of bonds is not an evidence-based approach,” Van said.
