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Topic: How To Invest

Stock Market Anxiety Leads to Bad Investing Decisions. Here’s What to Do Instead

Ignore stock market anxiety and negative stock predictions and instead focus your investing strategy on diversification and portfolio balance

The current state of the world is generating stock market anxiety, as it often does. My guess is that the Israel-Hamas war is just getting started and will last a long time. I also suspect that Russian dictator Vladimir Putin had something to do with getting it started, and will do what he can to keep it going. After all, when it comes to running his country, Putin takes a grasping-at-straws approach.

Putin may think that bringing the longstanding Mideast conflict back into the headlines is going to improve his chances of conquering Ukraine and bringing the Soviet Union back from the dead.

He thinks taking a long shot is better than no shot at all. Who knows? He might get lucky.

Early on in his war on Ukraine, Putin seemed to think that Chinese dictator Xi Jinping was going to take pity on him and his country, and offer free money and/or weapons to shore up Russia’s Ukraine invasion. Instead, Xi insists on staying out of the war, while paying discount prices for Russian oil. He takes special care not to let his country get caught up in the economic sanctions that the U.S. and NATO countries and allies are directing against the Russians.

How Successful Investors Get RICH

Learn everything you need to know in 'The Canadian Guide on How to Invest in Stocks Successfully' for FREE from The Successful Investor.

How to Invest In Stocks Guide: Find 10 factors that make your investments safer and stronger.

 I consent to receiving information from The Successful Investor via email. I understand I can unsubscribe from these updates at any time.

It’s not that Putin is stupid. If a war between Israel and Hamas turns out to be a big drain on the U.S. budget, the U.S. might have less money available to arm Ukraine.

Up till lately, however, Israel has had little to say about Russia’s treatment of Ukraine. Israel may soon take a more active role in helping Ukraine defend itself.

Any war is a terrible thing, and this one is no different. The stock market seems to be creeping upward. Maybe it knows something that Putin hasn’t figured out.

Meanwhile, if your stock portfolio makes sense to you, we advise against selling due to Mideast fears.

Stock market anxiety recedes with investment quality, diversification and portfolio balance

You’ll find that many of your worries concern things that are unlikely to happen; that are already largely discounted in current stock prices; and that probably won’t matter as much as you feared they would.

You get a much better return on time spent if you devote less of it to worrying about high risk investments, and more of it to an investing strategy. Create a strategy that is built upon analyzing the quality and diversification of your investments, and the structure and balance of your portfolio.

There’s another advantage as well. A calm investor is much less likely to react in haste and make sudden decisions that could prove to be damaging in the long run.

Notably, master investor John Templeton ignored  stock market anxiety and negative stock predictions and focused his investing strategy on value

Templeton got his start as an investor during the 1930s Depression. At the time, he felt investors were way more pessimistic than the facts warranted. Instead of dwelling on negative predictions, Templeton focused his investing strategy on the low p/e ratios, high dividend yields and other value indicators he saw in the market. In 1939, Templeton famously ordered his broker to buy 100 shares of every New York Stock Exchange stock that traded for less than $1.

He based his investing strategy on the assumption that the entire market was at bargain levels. He felt particularly confident about value in the lowest-priced stocks. They couldn’t be used as collateral for bank loans, and many investment professionals were prohibited from holding them. So there were lots of sellers and few buyers.

Templeton’s investing strategy was correct. Many of his purchases went to zero. But among those that survived, many rose fivefold, tenfold or more. Overall, this investment was a huge success. Templeton went on to launch his Templeton Growth Fund in 1954. It was a market leader for decades.

Focus on using our three-part Successful Investor approach to find higher-quality investments and to build a top portfolio

  1. Invest mainly in well-established, dividend-paying companies, with a history of rising sales if not earnings and dividends.
  2. Spread your money out across most if not all of the five main economic sectors: Manufacturing & Industry; Resources & Commodities; Consumer; Finance; Utilities.
  3. Downplay or avoid stocks in the broker/media limelight.

What are your biggest worries with the stock market? Does the current state of the world give you stock market anxiety?

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