When you hear the market has suffered a big drop, your first instinct is probably to check your investment account balances.
But that is actually the opposite of what you should do, according to Dan Ariely, chief behavioral economist at Qapital, a provider of a personal finance mobile app, and professor of behavioral economics at Duke University.
The advice is especially prevalent given recent market activity. The three major U.S. indexes — the Dow Jones Industrial Average, S&P 500 and the Nasdaq Composite —closed in correction territory on Friday for the first time since March 2016. Stocks extended that slide into Monday.
Some financial experts are predicting that the wild market swings could be here to stay.
And that likely means more confusion for investors.
“Volatility is inherently frightening,” Ariely said. “Being frightened means that we are paralyzed, we think about it too much.
“It influences our well-being, and it doesn’t necessarily lead to good decisions,” he added.