QUESTION: Crises and drawdowns: how to avoid making emotional decisions?

Emotional swings during market crises can drive an investor to make fatal mistakes, such as selling off a portfolio at the absolute bottom. To avoid making impulsive decisions, experts recommend avoiding extremes and not overestimating the initial return expectations of your investments.

Always leave enough room for real life and current expenses so that a drop in stock prices does not threaten your basic level of comfort. Track your investment progress using small checkpoints, noting not only the monetary value of the portfolio, but also the fulfillment of disciplinary rules.

A useful practice is to introduce a moratorium on any securities transactions for forty-eight hours after major news breaks or sharp chart spikes occur. This time helps lower adrenaline levels, allows you to assess the situation soberly, and ensures you act in strict accordance with your pre-formulated long-term strategy.