Thomas Shohfi, an assistant professor at the Lally School of Management and Technology at Rensselaer Polytechnic Institute, advises young investors through the RPI James Student Managed Investment Fund — and he has advice for how young investors can maintain composure during their first bear market.
It’s important to remember that the market has been rising since many young investors began investing, and they have never experienced a bear market — something that is stressful for even the most experienced investors. For millennials new to this market environment, a rapid loss of investment account value and severe daily swings can be very difficult to handle emotionally at a time when they’re also dealing with the fears of getting physically sick from Covid-19.
“I tell them not to let it dictate their lives and to not become addicted to watching the fluctuations. Be confident in the long term and avoid short-term speculative risks that could permanently damage their portfolio” Shohfi says. “They can instead choose to focus on things that are productive in their job, schoolwork, and career, take time off to enjoy with family and friends, and/or seek diversions such as exercise, reading, or video games. But still, it can be unbelievably mentally stressful and students should take advantage of mental health resources, such as though provided by universities, if necessary.”