It’s always darkest before the dawn

With the Investment Markets lately behaving as they are, I have been routinely using the proverbial expression, “It’s always darkest before the dawn” in conversations with clients to hopefully help ease their anxiety.

I am hoping this statement serves to be motivating and inspiring during a period when portfolio values are down as it serves to remind us that the darkest hour of all, is the hour before day- and it sounds much better than what my friend who enjoys surfing shared with me a bit ago, “You know you’ve hit the bottom when you slam into the reef.”

The typical cycle of Investor emotions during periods of Investment market declines usually begins with a feeling of euphoria at the top and then as the Investment Markets descend anxiety and denial follow, which Investors usually assert at this juncture, “It’s a temporary setback, I am long-term Investor.” However, as the market continues to fall further emotions such as denial, fear, depression, panic, capitulation and finally despondency sets in.

It is usually in the Panic to despondency section of the emotional cycle curve where that same Investor who said, “I am in it for the long-run,” begins to feel “Maybe the markets just aren’t for me.” This is the point where I sense it is the darkest hour of all, which is the hour before day and the point of maximum financial opportunity. Remember, it is always darkest before the dawn.