1. Cycle of Emotions –
when is the greatest risk?
• Many may have seen this graphic in some
form
• But … what does it mean?
2. • Which has greatest potential return?
• A to C? Or B to C?
Future
C
A
B
3. • Which has greatest potential return?
• A to C? Or B to C?
Future
C
A
B
The greatest price increase is from B to C (during Frightened)
4. • Which has greatest potential loss?
• A to C? Or B to C?
Future
A
B
C
5. • Which has greatest potential loss?
• A to C? Or B to C?
Future
A
Note: There still may be a loss if you buy during
“scary markets,” however, potential loss is less.
Assumes broadly invested in indexed funds, not
individual stocks.
B
The greatest price decrease is from A to C (during Elated)
C
6. Cycle of Emotions –
when is the greatest risk?
• Many may have seen this graphic in some
form
• Now … you may see what it means when
emotions are out of sync with potential
returns