The Power of Remembering

Memorial Day is a time of remembering, reflecting, and honoring those who gave the ultimate sacrifice for the freedoms we enjoy today. The act of remembering often brings feelings of gratitude, love, and a desire to do good to others. It is positive and empowering.

While remembering can be very powerful with respect to certain holidays or important dates, such as anniversaries and birthdays, we don’t have to wait for a special day to unleash the power of remembering.

We can remember an individual, a circumstance, or any event in our life to get greater meaning and purpose from it. And, ironically enough, when we take time to remember and reflect on the past, we often develop better perspectives to tackle the future.

Remembering and Investing

As investors, we can also remember lessons we learned from the stock market and even through our own prior decisions. Every investor has made mistakes; the question is whether we remember those mistakes and have a plan to improve on it in the future.

For example, investors have a great ability to hold onto securities that have gone down in value. At least they can hold on to initial losses and/or for a certain period of time. But at some point, many investors get exhausted and impatient. They have a knack for selling en masse near market bottoms. That is because it is darkest near the bottom and imagining any recovery may seem like nonsense. “This time is different” they say.

And perhaps one of the most important things to remember during a period of temporary losses, especially those that may be swift and severe, is how much you have made over the past five or ten years. Taking a longer view can help us put the current commotion in proper perspective.

And that is the power of remembering. Whether it is remembering where our freedoms came from, important people in our life, or how the markets work, remembering improves our perspective and, therefore, can improve our future decisions, in life or with respect to money.

Beth

 

©2021 The Behavioral Finance Network. Used with permission.