In the Media - This Common Investing Trap Messes With Your Mind – Here's How to Break Free (Investopedia)
- Holzberg Wealth Management
- Aug 20
- 4 min read
Updated: Aug 21
Our very own Marcus Holzberg, CFP® was recently featured in an article from Investopedia about why market swings often feel more painful than steady contributions feel rewarding – and what investors can do to keep perspective. The piece explores how behavioral biases influence investing decisions and offers strategies to stay the course when markets get choppy.
If you have ever checked your portfolio during a downturn and felt like all your progress disappeared overnight, you are not alone. Market volatility tends to trigger stronger emotional reactions than the steady progress we make with regular contributions. That reaction is rooted in behavioral finance: we are innately hardwired to focus more on losses than on gains. Psychologists call this loss aversion – the pain of losses feels significantly stronger than the joy of gains. Layer in recency bias, our tendency to give more weight to recent events than long-term trends, and short-term volatility can overshadow years of progress. As Marcus shared in the article:
“Losses scream; gains whisper. You can save for years, only to have one bad month make you question everything.”
The challenge is that this emotional imbalance can push investors to make costly mistakes, like panic selling or trying to time the market. But downturns are a normal part of investing, and they don’t have to derail your plan. In fact, they can create opportunity if you use strategies designed to work with volatility instead of against it.
One of the most effective is dollar-cost averaging – investing a set amount at regular intervals, regardless of what the market is doing. This naturally helps you buy more shares when prices are lower and fewer when prices are higher. Over time, it smooths out returns and eliminates the pressure to predict the next market move.
Of course, even the best strategies only work if you stick with them. That is why mindset and discipline are just as important as investment selection. Automating contributions builds consistency, while a diversified portfolio aligned with your risk tolerance ensures that downturns, while uncomfortable, do not jeopardize your long-term goals. Investing is like a bar of soap; the more you touch it, the less you are going to have. Constant tinkering often does more harm than good, while a steady, long-term approach keeps you on track to meet your goals.
It also helps to keep things in perspective. A 10% correction in the stock market tends to happen about once every 30 months, and historically, markets have recovered within an average of eight months. We wrote a newsletter breaking down the frequency of market downturns, which underscores just how common these events really are. For long-term investors, those short-term dips are just blips on a much larger upward trend.
Ultimately, the key is to remember that volatility is not your enemy – it is an integral part of investing. With a diversified portfolio, consistent contributions, and a clear long-term plan, you can weather the ups and downs with confidence. Or as Marcus put it
“Short-term pain during market swings doesn’t change long-term goals.”
The Bottom Line
Market swings can feel bigger than they are because our brains are wired to overreact to losses. But with a sound plan, consistent contributions, and the right mindset, volatility can actually become an ally in building wealth. If you find yourself worrying about market dips, it may help to revisit your long-term goals, review your investment plan, and talk through your strategy with a fiduciary financial advisor who can help you stay the course.
Need help optimizing your portfolio to better weather market volatility? Check out the article here in Investopedia featuring Marcus Holzberg, CFP®.
If you have questions about your financial plan and working with a financial advisor, check us out. You can schedule a complimentary, no-obligation call with us here!
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About the Author
Holzberg Wealth Management is a family-owned and operated financial planning and investment management firm based in Marin County, CA. As your financial advisors, we serve you as a fiduciary and are fee-only, so we never receive commissions of any kind. We help individuals and families like you in the greater San Francisco Bay Area and virtually nationwide with the financial decision-making process to organize, grow, and protect your assets.
** This writing is for informational purposes only. The author and Holzberg Wealth Management do not guarantee or otherwise promise any results that may be obtained from using this report. No reader should make any investment decision without first consulting their financial advisor and conducting their own research and due diligence. These commentaries, analyses, opinions, and recommendations represent the personal and subjective views of the author and do not constitute a recommendation, offer, or solicitation to make any securities transaction. The information provided in this report is obtained from sources that the author believes to be reliable. External links to third parties are being provided for informational purposes only. Holzberg Wealth Management is not affiliated with the third-party websites linked to, unless otherwise explicitly stated, and does not constitute an endorsement or approval by Holzberg Wealth Management of any of the third party’s products, services, or opinions.
