By Chuck Carnevale:
The typical retired investor, and those approaching retirement, have spent a lifetime accumulating assets in order to support their families once they quit working. Consequently, their portfolio’s value takes on a heightened level of importance. Inherently, and to a great extent logically, this simultaneously generates a more conservative attitude towards investing. Retired investors no longer have the luxury of time to overcome mistakes, especially devastating ones.
Therefore, perhaps to a greater extent than at any other time in their lives, they become more emotionally attached to their money. However, there is an insidious side effect that heightened emotions bring with them. When a human being enters a highly charged emotional state, especially to the extreme, common sense and rational thought are often abandoned. In matters of investing, this usually means that our innate fight or flight response takes hold.
This instinctive stress response has not only been shown to