Fear Factor: Investment Edition

Just saw the new promo for the updated version of the show “Fear Factor.” (warning it does contain some gross content) Yes, the producers have found new ways to amp up the fear of contestants and viewers — from eating a new variety of unsightly forms of life to apparently being strapped to the front of a moving semi. This formula worked well in the past for Fear Factor because humans are emotional in nature. It is just how we are wired.

Watching the preview for the show, I couldn’t help but relate it to the market events we have experienced the last week, month or even few years. It seems a new fear factor challenge is just around the corner for investors to experience and react to. Unfortunately, unlike a television program where reactions range from disgust to turning the channel, the market’s fear factor challenges are causing many investors to react with devastating financial consequences. From seeking “safety” and missing rallies to embracing a “buying opportunity” only to see further declines, many investors are flailing due to fear.

The jump this Fear Factor contestant is making isn’t that far removed from the fearful reactions of many investors.

 Taking a step back, moments of great fear in the markets have always and eventually been great buying opportunities. Times like this require a plan, the discipline to stick with it and a long term perspective. Without it, investors are no better off than the average contestant on Fear Factor.