Stock Market Crashes | 4 rules for controlling your emotions
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- Опубліковано 13 чер 2024
- "If you can't control your emotions, you can't control your money" - Warren Buffet.
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I am a Chartered Wealth Manager and Partner in a financial planning practice based in the UK. If you would like to find out more about working with us, please follow this link: go.novawm.com/getintouch
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This is the hardest part about investing because it cannot be taught, it can only be learned through experience.
In this video you will learn 4 rules to help you control your emotions:
- Have a plan
- Embrace Volatility
- Embrace Crashes
- Act Slow
00:00 - Why this is important
04:43 - Have a Plan
07:23 - Embrace Volatility
11:21 - Embrace The Crashes
14:13 - Act Slow
DISCLAIMER:
This channel is for education purposes only and is not affiliated with any financial institution, although James does work as an employee for a wealth manager. This content is not a personal recommendation to take action. If you are looking for personal investment advice contact James Shackell directly.
James Shack™ property of James Shackell
Copyright © James Shackell 2021. All rights reserved.
The author asserts their moral right under the Copyright, Designs and Patents Act 1988 to be identified as the author of this channel and any video published on it.
How do you control your emotions? What would be your advice for other viewers?
I had a little chuckle when i saw that panic at £15 loss. Why? As i can totally relate and went through that on a bigger scale. I invested a lump sum at start of Jan 2020. By mid March i was having an absolute melt down. Ending up deleting all the apps, blocking the emails and trying to ignore it all. Was a hard lesson but hopefully i will react better next time. If i ever invest a lump sum again think I'll drip feed though
Tell yourself you're buying units of value and shares in companies. You're buying 2 units of a fund, if the money "goes down", you've still got 2 units. Does Apple still exist? Does Microsoft still exist? Yes. Do you still own 2 units? Yes. And now you can buy 2 units for less than you bought them before. :) Hold fast, and go looooong!
Unless Apple, Microsoft & Amazon get wiped out at the same time tomorrow, then change your pants and sell, sell sell.
Don’t look at your portfolio!
It should be in your written plan should the markets crash then only look once per month rather than every 10 minutes.
Another excellent video. I'm a seasoned teacher and appreciate the knack of delivering content to a target audience in an engaging and informative way. You have the gift, my friend. I salute you.
Haha cheers Rob!
Thanks James, the voice of reason as always. Appreciate your experience where I have none! 😅
Anytime!
It is all about the four rules. Great video.
Hey James, great video as always! I have one question: can you do a video where you actually explain how to end your long-term investment? I mean, after 30 years of investments, how do you actually decide when to sell? Let's say that the next year I'm goig to retire, how do I know that in that year there won't be a market crash and I'll lose all my profits just when I wanted to sell out and get all my money?
Hi Filippo, Ok sure it seems like there quite a few people who are interested in that so I'll do it.
@@JamesShack thanks James!
Love these videos!!
Thanks for watching Matt!
God I really wish I was taught this stuff in school
Yes A levels need to be changed!
That is the most useful information I've learnt, in 15 minutes, during my entire life. Superb.
Another great video, James. Keeping your head when others are losing theirs is easy to say - not so easy to do, and I speak as someone who has been through a few crashes. Good sound advice here.
BTW - I'd second the idea of a video (or two) on the shift from investing for the future to... enjoying that future and the best way to finance it.
Great video and one every new to investor should listen to, I haven’t been investing for that long but i’ve learnt to put my money in and forget it (in a way). I love seeing the markets dip because it’s like the shares are on sale 👍🏼
That’s the mind set!
James, yet again - a great fact filled video. The content you create is very important for the current generation of investors.
There are way too many "advisors" on UA-cam showing people the "hack" to make money fast from investing through the likes of crypto , micro caps, etc. Which then lead people to loss a lot of money.
Your videos are incredibly straightforward and beneficial and I hope you continue to keep sending out these videos! Thanks again!
Thank you so much for writing this, it makes it all worth it!
So sensible.... Many thanks James as usual
You’re welcome Sue.
I've been watching a few of your videos, I noticed you don't have a lot of content yet, but what you have is great! Length is good, explanation is outstanding and accent is the best ever! Thank you because most of the videos are clickbait and then people sharing their own experience and success in stocks. But with your videos, you're able to empathize and give hard facts and data. Never imagined emotions on finance could be something people would talk about, really really good!
Thank you luis, i'm glad you appreciate the small amounts of content i do have!
Don’t look at your portfolio in a falling market , only look when you intend to buy more
This makes for an easy life.
Just catching up and listening whilst I work. Going to have to show my therapist that I not only made a rational comment, it was actually deemed sensible by an expert! As someone with anxiety I'm probably the WORST investor BUT I'm sticking to my plan and apply my CBT coping strategies to my investing like with my day to day life.
My main coping strategy is only dealing with things in life I can CONTROL. I cannot control the global market performance but I can control where I put my money and how much I put in which is where I choose to spend my time. When I feel comfortable how much I'm putting in and where I'm putting it, I panic less about it's performance because I've taken my time to make those decisions and it felt like the best option at the time. I'd rather put money into my Vanguard global all cap than dogecoin for example!
Fair enough. Are you a personal tax accountant ? If so, it would be good to chat to you and see if there’s any way we could work together in a professional capacity, me being a wealth manger and you an accountant, we could have a lot of client cross over. Would you be up for that?
@@JamesShack sorry James I saw this comment and forgot to reply! I work in corporate taxes but I did modules in all areas for my CTA exams and am now under the self assessment rules with my rental property.
I've added you on LinkedIn so we can connect! Personal tax is an area I am looking to improve in as I aim to go self employed as some point and most small businesses want a holistic tax approach. I do help out my self employed sole trader friends. However, could I advise your kind of clients? Definitely not at the moment!
Cheers, Shacko!
No worries!
Great vid. Thanks.
Cheers Euan!
Wow, amazing! This video is so good! Thanks for sharing this amazing financial wisdom 💸
Digging the heavy jumper in late May.
This weather... Next week though!
How about a video for those people who are near to retirement and maybe only have 3 to 5 years at best with their investments and what they should be thinking or looking out for as emotions are running so much higher being so close to retirement & nolonger having the 20 year window to invest.
Excellent video!
Glad you liked it!
This a great video . Thanks you
No problem!
I just started investing last month, did a big lump sum, so this definitely put me at ease!
You need to forget about that money now! Think about next months!
Another great video! Never thought to write it down but I follow Hannah B’s plan. Thanks James 👍
Yep writing it down sounds silly but it can really help down the line.
Really good video, great explanation keep up the good work
Cheers Richard!
Smart !
The best cure for FOMO, great video on investing!.
Thanks !
This is an informative video, but more so for people who aren’t retiring for 20-30 years.
James, i appreciate the great content you're putting out, but.. I want to understand your thoughts on DCA, because to me overall it seems like a sure way for your portfolio not to move much, wouldn't it make more sense to purchase e.g. a LifeStartegy when its undervalued rather than paying w.e price is on the sticker?
How do you know when it's undervalued? And what if the market keeps going up from here?
Great video as usual. Very informative. If you had a lump sum to lock away for 15 years or so, would you invest it as a lump or dollar cost average it? You views would be most valuable. Thank you.
Technically it's best to do it a lump sum, but phasing it in over 6 months can help you manage your emotions. www.dimensional.com/us-en/insights/taking-stock-of-lump-sum-investing-vs-dollar-cost-averaging#:~:text=Unlike%20lump%2Dsum%20investing%2C%20in,contributions%20using%20installments%20over%20time.
Great stuff.
Plan is: never sell (even Coinbase!) 😆
I love a bit of volatility 😀
Coinbase, hold on!
Hi James. You talk about pound cost averaging in this video which I am familiar with. I’ve also read that it’s better to just stick it all in if you’ve got it as you’ll end up better off ~60% of the time, which makes sense as markets tend upwards. This is the first tax year I’ve had money to invest. I’ve maxed out my isa allowance with a life strategy with vanguard. In the new tax year in April I’ll have £20k in cash ready to invest. So, should I put it all in in one go or spread it out over 12 months? Would love to see a video on this in the run up to the new tax year.
We’ll you’ve done the maths yourself! The only reason to delay is if you think it will help ease your emotions.
Nice one, James, thank you! Some people complain that Vanguard doesn't have a mobile app, while I like it - prevents me from randomly logging in on my phone to see how my money is performing and so I hardly ever think about it. On another note, I think it was Thursday evening when I noticed some cryptocurrencies had gone down 30%, but decided not to expand my portfolio as I'd had two pints already. By the time I woke up in the morning, the market half recovered. There is only one conclusion - next time I see a discount, I should be drunk buying! lol
Haha - i'm not sure about that but then again Crypto is the wild west. Who knows!
great advice
Thanks for watching mate!
@@JamesShack I hope your channel grows to help more people. A lot of videos you have done have literally been a monumental help to me and those I share it with.
I'm in the same boat as the commenter. I started a few months ago on a stocks and shares isa. At the moment 13.5% down. It's just rubbish but as always stick to the long term plan.
Amazing video and great advice, I have been so nervous seeing my investment go down some by quite a bit but I just tell myself that I am in the long game, keep up with the great advice 🙏
Thats it Arun!
@@JamesShack I just wish someone like you could teach kids about basics of finance. You have a great knack of capturing your audience with simple content and strong delivery 👍
I started investing just 8 weeks ago. Lump sum, 2 products. Currently a bit down, a lot actually. But i have enough to get through next year, money was for future, not now. So it is staying where it is. Some in an Index, and some in an investment fund. Think I may have purchased at current top of market, now have to leave it alone and leave it there. I am older, but nothing to be gained just leaving money in the bank.
Other people can also impact your mood, conflate your bit of fear into a torrent. Just tell them you have your plan and happy not to discuss it with them as you have a different opinion.
Yes. Did it help to write this out? Makes the plan more real!
Nothing is gained or lost until a share is sold. A share is a share. 😉
Let's see how I feel about this statement in five days. It's currently Sunday evening in the US. 😭
logically it seems very simple to just hold, but when you are 40-50 and see a portfolio of a few hundred k tank i can only imagine the stress even if you are aware you need to hold.
Yes, it’s easier said than done!
Great video James. It’s always good to hear clear advice without a UA-camr trying to ‘sell’ anything on the side.
I like the phrase “buy it and forget about it”
Thanks Mark. Well the primary aim is to help people help themselves, but at the same time i want people to feel like they can get in touch with me if they need more help. The worst scenario is when people know they need help but don't know where to get it, so hopefully im more approachable than a faceless financial services business!
Thank you for the video. I think I am the worst type of investor! I had put in a significant lump sum for me in Lifestrategy in Februaty this year and have been checking progress every day since. I have now reduced my exposure and will drip feed some money back in over a period of years which will allow this chimp to sleep easier. Thanks again.
YEs, drip feed and try not to look!
🙏
👍
I think the Buffet quote at the intro is typed wrong? Or else it doesn't make sense.
Emotions! If only we had an on and off switch in out brains...
I wish!
This is great! If you have a lump sum to invest (say 20k) should you put it all in at once or drip feed it in monthly to make sure you're not putting it all in at the wrong time?
I wouldn't invest that kind of money just now, the stock market is too high. Invest 5k +pac. Hold on onto the 15k and wait for the next crash
I'm only saying this because I don't think this bull market will last much longer
@@rinodb83 this is exactly what I'm doing. I have a similar amount to invest, but only putting in 4k for now and leaving the rest to buy when it's crashed, AND separately, I still intend on investing monthly the money I save from my wages.
Does feel a bit 'off' leaving a lot of money lying around in a savings account, but I'd rather put the rest in when the market is at a low, not when it's high.
@@Lucky13_537 yeah, I agree. Many would think this is not the wise strategy, but I really feel stock market can't keep growing for much longer, something is off with the economy right now. Surely, we're seeing positive news about infections, travelling and vaccines but last year countries have "printed" to much money, inflation is going to be bad and I don't know how bad it will impact the markets.
From a probability perspective it's best to put it all in. But it's dripping it in every month can help from an emotional perspective.
My strategy is similar to HannahB’s comment. It’s all about self discipline!
Yes it is. Good luck with that. After a while you get addicted to investing each month and you don't care what's happening after it's gone in.
Best thing to do is sign and recline. Only invest money you dont need and just leave it and dont look at it for maybe a year and even then just take a peak and go cool see what its like in another year
Hi James a quick question. Our FA has recommended we take the Vanguard lifestrategy 60 as a Sipp (pension transfer) through Aviva with approx 4k costs pa to start. Why not direct to Vanguard ? Can you help please ?
Hi Shaun, So you’d be transferring your existing pension to the Aviva platform and then have it invested in LS? What’s the actually cost break down? I think Aviva platform is about 0.3%, 0.22% for the LS AMC and then an adviser charge of 0.5-1% I would imagine. Does that sound right ?
Hey James that's right. With the FA and Aviva it's over 11k costs next year. We have not met the FA he was a referral from the company pension scheme and we were lucky that the company are paying initial investment charges. Is it possible to miss out Aviva, Vanguard have the same facilities and protection 🤔
@@shaungregory1789 I imagine you’ve met him via video call though ? That’s a question for your Adviser. Most advisers use one or two platforms so they can more easily manage all of their clients, the problem with Vanguard is that they only offer their own products. Where as you can have a lot more variety with Aviva.
Hi, no just phone calls, but not out of blue, we made sure and doubled checked with the company pension scheme. We are both retiring at 55, Jan 2021 so living on voluntary redundancy at the moment, no rush ha ha.
I was a retail banking FA so FPC 1,2,3 and CF2. So we know no CGT with Sipps but not expecting to do any more contributions, so is a platform needed. If we transfer growth funds for diversity out of the Sipp, presume income tax is liable if over tax thresholds. We want income for a fantastic retirement hopefully 🙏
Thanks James great video's 👍
@@shaungregory1789 Hi Shaun, no problme! If you do want a second opinion on any of this feel free to book some time in my diary calendly.com/james-shackell/call-with-james-15
I'm back here because within the last month I have seen the loss of all last year's gains and then some. This follows a bumper year in 2020. I just wanted to remind myself I should ride it out, but I intend/need to start UFPLS in 4 maybe 5 years. Obviously, whilst volatility is an accepted, surely there must be a real risk you will be obliged to cash in on a low point. Basically, I can't countenance leaving money in situ indefinitely. In your experience, is there any cyclic pattern to investment returns?
Hey! What have you been investing in? There are investment cycles but it's very hard to predict when they will occur. Building up a larger cash buffer as you get closer to retirement can help insulate you from short term market movements.
Even better 2 years later after 2022 and 2023.
Stock markets, the only place where buyers run away from sales and discounts...
Very true!
Hi James, I have learned so much listening to your videos. I have a question to ask: I recently inherited £20,000. I have decided to open an Stocks and Shares ISA with vanguard. My question is, should I invest the entire £20K now not knowing if the market is about to crash soon? Oe should I start with £500-1,000 and £300 pm and wait and see? Please help! This is the first time I do this and I am so scared. 🇻🇪🍀
I believe the research shows you’re best to invest a lump sum. But it feels a bit of a stretch so I tend to do something like half now, and trickle the rest in every few weeks over a few months
Thank you Charles for your kind response 👍🥳🙏
Do you think it will be bad idea to withdraw money from my pension this month?
My video this sunday will cover this. You should only be withdrawing money from a pension as part of a systematic plan to suit your cashflow needs. Write up a plan for what you need each year then stick to that, don't make last minute decisions trying to time the market.
@@JamesShack aww James, you are such a darling taking the time to respond. THANK YOU:)
Clinic
I have a similar mindset to Hannah. I am putting money into it as though I am spending that money rather than saving it. I am treating it as though it is already gone. Dips are merely a good time to buy, not a loss of money. I will just have a nice nest egg that will allow me to retire on a boat on the English Canal network.
I am also kind of treating it like a game. You don't stop playing just because your score this turn wasn't as high as the last turn. Also I am in the process of developing a scalping bot. It is showing promise. Based on historical stock market data it is profitable. It would have made a 5% return over the year of 2013 if it ran back then, but I am still very apprehensive put money into it on live data due to the live competition.
This is great advice for someone who has another 20 years to keep investing. I'm VERY close to retirement so I've been using a different strategy of less invested in stocks than when I was younger. I also keep a cash reserve to buy the dips/crashes in the market. I have to consider those crashes as opportunities to buy stocks at lower prices and hopefully enjoy higher gains. I know that may be considered timing the market which is an investing sin but so far, so good. The market as it is today is a little scary because of the current monetary policies and widespread debt but I want to stay reasonably invested for someone my age. I hope to come up with a different strategy once I'm retired to create enough of a return to cover inflation and keep the rest safe.
Unless you're planning to buy an annuity or die soon what difference is there in 20 years from, say, 30->50 or 20 years from 60->80? Take out just what you need for the next couple of years and stay invested with the rest.
At least in normal times that would be the approach I take when stocks aren't trading at 400% of their real value.
Currently I am 100% in cash waiting for the stock market crash to hoover up cheap shares.
@@edwardkenworthy7013 I have 70% in cash right now and 30% invested. I also think the market it oversold and due for at least a 20% correction. Of course I could be completely wrong but I don’t want to lose a large portion of my nest egg this close to retirement.
And also, if i remember correctly, you don't NEED to take the risk because you have significant savings.
@@JamesShack Yes, that's mostly correct. I would like to continue to generate income in retirement but I'd like to do it with minimal risk. I hope the strategy of keeping 30% invested covers the loss to my cash reserves form inflation and gives me a slight gain. No one knows for sure what the market is going to do so I find it hard to make decisions this close to retirement. I'm sure fear of losing it is what keeps me at such a low level of investment right now. I just feel like we are in an asset bubble that could pop just as I'm about to retire. That would hurt if I were fully invested. What I have invested is VERY diversified and I made what I think was a smart decision at the first of the year to buy a significant number of STIPS to help keep my investments balanced when bonds/treasuries are performing so poorly. I'm just amateur so I'm reading and learning as much as I can along the way. Your videos are very helpful. It's nice to hear insight from a pro! Your videos seem smart and sensible whereas the carnival barkers on TV (who I shall leave nameless) seem to contradict themselves every other day when they've turned out to be wrong. Also, does not hurt that your info is delivered with a cool British accent. :) I also like Pension Craft and Paul Merriman.
Pretend you have a teeny tiny James on your shoulder!
As I had the available cash, I put a £20,000 lump sum in a Vanguard Stocks and Shares ISA. I’m beginning to think it was a bad move? Maybe I should remove most of it from its present position and drip feed it back in until next April?
I’m in the same boat. I’ve been feeding it in monthly over the last year or so. As long you’re investing over the long term (10-20 years), and can stomach a big short term drop over the next few months, I wouldn’t worry about it
@@matloz100 my problem is I'm only 3 years from retirement.
@@Wickerman1958 ah ok. I guess it depends when you might need the money. I’d speak to a financial advisor
Mike,
Look at your 20k again in 10 years.
My family has been investing for over 100 years !
Hi Mike, you need to make sure you've got available cashflow to cover your first few years of retirement. But other than that your investment horizon can still be 15-20 years. If you want to chat about retirement planning properly feel free to drop me an email with a brief synopsis of your situation to james@octopuswealth.com and I'll see how I can help.
I am waiting for June 10th when the US inflation numbers come in. You know that's a bad number. There should be a nice dip in the market, that's when I plan to load up[
Sounds reasonable. Anyone else care to weigh in?
That's a risky bet. The market may already be anticipating high numbers and that result may not materialise.
How did that work out for you?
@@ActaNonVerba1961 The reality is that if you have some sort of theory on what may happen, millions of others have that same theory too and therefore the risk of that scenario occurring is already baked in. I need a way to collect these and do a video on them.
@@JamesShack seems like that would be hard to measure, but if anyone can do it, it’s you! 👍🏻BTW, the S&P (SPY) actually spiked upward on the June 10 news. It’s back to it’s June 9 level today. The OP would have lost money on that bet.
Hi James. Thanks for your videos, they have given me so much more confidence in investing, being a newbie, and I'm already seeing some nice returns on my pension with Vanguard Lifestrategy 80/20, with Hargreaves Lansdown.
For a pension investment which is of course long-term, would you recommend holding some back as just cash in cash markets crash again?
Buy your LifeStrategy Fund Direct from Vanguard and save on the HL broker fees. I am sure you will save money on the costs. I hold Vanguard Life Strategy and bought in as soon as they permitted direct access. Great Company very helpful, with quick response to queries plus easy to use website.
@@Bigh141 thanks very much for the help, much appreciated. HL are used for my workplace pension so I have no choice, luckily their fees are very very low.
Hi Chris, i would not recommend holding cash back to try and time the market no. If you have already decided that this money should be invested for the long term you do it straight away, or potentially phase it in if you are a bit nervous.
@@JamesShack thanks James. This is my workplace pension and HL give you the option to invest or hold some/all as cash. At the moment I have 45% of my pension assigned to Blackrock Consensus 85 (which is 50/50 equities/bonds) 50% in Vanguard lifestyle 80/20 and the remaining 5% in Vanguard high dividend yield as my play thing 😀
Especially good video for what happened recently with the drop, I have gained 26k in three months with Vanguard, down to 17k for the beginning of the week and now 27k. Before I changed my investing mindset in March, I would have been worried about the markets drop at the beginning of the week, now I just think I am in it for the long term.
Yep, thats the idea. But it can take several years to realise that!
@@JamesShack An idea for another video, compare S&P 500 and Nasdaq 100. It is a shame Vanguard do not do a Nasdaq 100 Index Fund.
having the oposite issue, the more the market falls the more of my emergency fund i put into the market :P
£500 and losing £15 sounds like bliss compared to when I popped £5k in a China fund the day before they announced a new novel virus...
I still hold that fund. ;)
All my mates suddenly got into the Alliance China A shares fund just before then too. It's only just coming back. I hear it's a good way to invest in China though.
@@JamesShack interesting breakdown of holdings in that fund. Mine was/is the more standard tencent, Alibaba, ping dominated offering. Will take a further look at the Allianz fund tomorrow as I'm a sucker for speculative Chinese investments.
£500? Imagine depositing 6 figure and getting the same dip couple days after. It wasn't easy, but I have to keep up with it
Love when markets go down March 2003 was a real opportunity Sold everything in 2006 summer and paid off my first mortgage which I'd taken out in 1997
HODL and Buy the Dip
HODL! This is the way.
I understand your point, but you really need to hope you don't need money from your pot when a crash happens lol
If you need money in the short term it should not be in the markets, or it should be at a much lower risk than normal. It's all about good cashflow planning.
Too true about cash flow planning me & the missis going this year aged 55 fist 5 year are covered by cash in/outside sipps next 5 in vls40 the rest is within the vanguard personal finance planning
Are you trying to say lets hope you dont want to retire and take the money during a mega crash. Surely you wouldnt ever be pulling all your money out at one point anyway.
S&P 500 and dollar cost averaging! You will be talking with an American 🇺🇸 accent shortly James😂
You haven't 'lost' any money unless you sell at a loss. HOLD on!
Thats the truth!
Having remortgaged to buy Bitcoin it’s hard right now not to want to just stay in bed all day.
the emotions that made me do the biggest misstakes was greed, Now i can control my greed so i dont spend all available money on some stupid penny stock or crypto meme.
Hanna shouldn't think of buying crypto as an investment. It is not.
🙏