Dimensional's David Jones: Embracing fears can lead to better financial decisions

Impulsive decisions have drawbacks

clock • 3 min read

The usual connection made between emotion and investing is that anxiety clouds one’s judgement: it distorts reality and amplifies minor concerns.

Just as a minor niggle can be self-(mis)diagnosed as a serious illness, a market blip (or even mere speculation about one) can be extrapolated to a bear market. Both bouts of worry can trigger action that spirals to bad outcomes. The past few months have seen myriad opportunities for investors to let decision-making be driven by short bursts of noise - escalating global conflicts, a divisive election and a Budget with large-scale tax rises. But what if we channeled our anxiety towards positive action? What if we took one step forward when we felt worries, rather than two steps back...

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