Fighting Investing Fears in a Difficult Market

June 2, 2022
We can be our own worst enemy when emotional and behavioral factors drive our investing decisions. So how do we get past them and make sound choices?

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After you listen

  • Listen to Financial Decoder to learn more about cognitive and emotional biases that might impact your financial decisions.
  • Follow Mike Townsend on Twitter―@MikeTownsendCS.
  • Listen to Financial Decoder to learn more about cognitive and emotional biases that might impact your financial decisions.
  • Follow Mike Townsend on Twitter―@MikeTownsendCS.

When the market gets volatile, turns downward, and keeps throwing curves, it can be hard to stay on track. Mark Riepe, head of the Schwab Center for Financial Research, joins Mike to explore how stress, emotions, and behavioral factors like loss aversion and recency bias can lead to making poor financial decisions that don’t fit with our long-term plan. They also share ideas for overcoming these influences and what investors should be doing in these challenging times.

Mike also looks at new SEC proposals for standardizing how companies and funds offering environmental, social, and governance-focused investing, known as ESG, describe their products and how they disclose information about their products to investors. He also offers updates on the progress to fill vacancies at the SEC and the final open seat at the Fed. And he lays out which of the dwindling number of bills that have bipartisan support could make it through Congress prior to the mid-term elections.

WashingtonWise is an original podcast for investors from Charles Schwab.

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Will government policy affect your money?

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Midterm Elections Signal More Washington Gridlock

While results won't be finalized for some time, it is clear that we will have two more years of an extremely narrowly divided Congress.

Fed Hikes Aggressively, Signals More Hikes to Come

Stocks slid and Treasury yields rose as comments by the Federal Reserve chair suggested the "peak" fed funds rate may be higher than initially expected.

Important Disclosures

Investors should consider carefully information contained in the prospectus or, if available, the summary prospectus, including investment objectives, risks, charges, and expenses. Please read it carefully before investing.

The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party. The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance.

Investing involves risk, including loss of principal.

Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested in directly. For more information on indexes please see www.schwab.com/indexdefinitions.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

Diversification strategies do not ensure a profit and do not protect against losses in declining markets.

Environmental, social and governance (ESG) strategies implemented by mutual funds, exchange-traded funds (ETFs), and separately managed accounts are currently subject to inconsistent industry definitions and standards for the measurement and evaluation of ESG factors; therefore, such factors may differ significantly across strategies. As a result, it may be difficult to compare ESG investment products.  Further, some issuers may present their investment products as employing an ESG strategy, but may overstate or inconsistently apply ESG factors. An investment product’s ESG strategy may significantly influence its performance.  Because securities may be included or excluded based on ESG factors rather than other investment methodologies, the product’s performance may differ (either higher or lower) from the overall market or comparable products that do not have ESG strategies. Environmental (“E”) factors can include climate change, pollution, waste, and how an issuer protects and/or conserves natural resources. Social (“S”) factors can include how an issuer manages its relationships with individuals, such as its employees, shareholders, and customers as well as its community. Governance (“G”) factors can include how an issuer operates, such as its leadership composition, pay and incentive structures, internal controls, and the rights of equity and debt holders. Carefully review an investment product’s prospectus or disclosure brochure to learn more about how it incorporates ESG factors into its investment strategy.

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