Fix It Friday - The Destructive Buy High, Sell Low, Repeat Until Broke Investor Behavior: The Causes and the Cure
Welcome to Fix-It Friday on the Crazy Wealthy Podcast, where Jonathan Blau, CEO of Fusion Family Wealth, shares actionable behavioral finance strategies to help investors make smarter, evidence-based decisions. In this episode, Jonathan explores the destructive buy high, sell low pattern that impacts millions of investors every year.
Listeners will discover how cognitive biases like loss aversion, FOMO, and envy influence investor behavior, leading to emotional mistakes that erode long-term wealth. Jonathan explains the difference between stock price and company value, why panic selling during market downturns is costly, and how to adopt a long-term mindset focused on owning great companies.
The episode also covers practical strategies for counteracting emotional investing, including portfolio rebalancing and disciplined decision-making. Investors will gain insights into financial psychology, risk perception, and how to make better financial decisions that align with their goals.
What You’ll Learn:
✅ Why investors buy high and sell low and how behavioral biases drive this pattern
✅ How loss aversion, FOMO, and envy impact financial decision-making
✅ Portfolio strategies like rebalancing and focusing on long-term company ownership
✅ How to separate price from value to make confident, evidence-based investment choices
Want to make smarter financial decisions grounded in clarity and confidence? Subscribe and share the Crazy Wealthy Podcast. To learn more about Fusion Family Wealth’s evidence-based investment strategies, visit www.fusionfamilywealth.com and request our current disclosure brochure.
Key Timestamps:
00:00 Introduction and podcast disclaimer
00:30 The buy high, sell low trap: why it happens and who it affects
03:00 Behavioral biases driving emotional investing: loss aversion, FOMO, and envy
06:00 Price vs. value: how thinking in terms of great companies prevents panic selling
09:00 Portfolio strategies to counter emotional decisions, including rebalancing
11:30 Closing thoughts and actionable takeaways
Key Takeaways:
💎 Emotional investing driven by behavioral biases can lead to buying high, selling low, and losing wealth
💎 Distinguishing stock price from company value helps investors avoid panic selling
💎 Portfolio rebalancing and long-term ownership strategies counteract emotional decision-making
💎 Behavioral finance awareness improves investor discipline, confidence, and long-term results
About the Host
Jonathan Blau is the President and CEO of Fusion Family Wealth, a fiduciary wealth management firm founded in 2013 to help families achieve clarity, confidence, and purpose with their money. With expertise in behavioral finance, Jonathan teaches investors how to identify cognitive biases, reduce emotional investing mistakes, and make evidence-based decisions that support long-term wealth. He is a sought-after speaker in wealth management and previously held senior roles in tax and estate planning at Arthur Andersen. Jonathan holds a BS in Finance, an MS in Taxation, and an MBA in Accounting. Based on Long Island, he is active in the local business community, supports organizations like the Middle Market Alliance and Sunrise Day Camp, and enjoys boating with his family.
Transcript
A copy of Fusion's current written disclosure brochure discussing our advisory [00:00:15] services and fees is available upon request or at www.fusionfamilywealth.com.
y talk about one of the most [:Sell low and repeat until broke strategy. Sounds absurd, but, but there's actually millions of investors who [00:00:45] fall into this trap every year. So today I wanna explore why this happens and hopefully give some contextual framework about how we can identify. When it's happening to us and how to overcome it.[00:01:00]
illuminate and demystify the [:And now here's your host.
this way? And one of the key [:So when the price of the stock drops, investors somehow think that the [00:02:15] long-term enduring value. Of whether it's Coca-Cola or Apple computer is also dropping. And of course that's not what happens. So price and value are two different things and, and the way investors can start succeeding [00:02:30] in terms of getting away from this buy high and sell low behavior is to stop thinking of their investments as investments in the stock market, and instead think of their investments only as investments of the great companies of [00:02:45] America and the world.
o at some point or other. So [:The average bear market decline is, is about a third. So these are normal declines. There's nothing catastrophic about them, but when they happen, particularly when the declines I've seen in my career, and this is just [00:03:30] from what I've seen, this is not empirical data that I study when we tend to go down below 25 or 30%, the real panic sets in and unfortunately, by the time we're down that much.
er discounting, whatever the [:And it's just at that point when investors want to sell low. [00:04:15] And so what happens during euphoric markets, which are the opposite of panic? I always look at euphoria as the, the, uh, the complete absence of an adult sense of fear. So we just want to, at all costs, [00:04:30] uh, give into envy, fomo, fear of missing out and chase whatever's going up.
to [:One is called loss aversion bias. It's proven that we dislike or feel the pain of a loss two times more than we feel an equivalent gain is pleasurable. And so what we do is we [00:05:15] don't seek to maximize or, or engage in strategies that will maximize our long-term benefit, but that will minimize our chance for short-term loss.
e-wired to exhibit. And, and [:But if you imagine yourself on a desert island where nobody else was around except you and your, your loved one, um, would you still want the Ferrari? Would you still want the big house? You probably wouldn't. [00:06:00] Because there's no such thing as wanting greater things in absolute terms, it's always in relative terms, we want a bigger thing.
at's envy. That's not really [:We deserve it. Right. So Warren Buffet, by the way, along these lines, has a great, a great quote that I love. He says, people start [00:06:30] being interested in something because it's going up, not because they understand it, but the guy next door who they think, who they know is dumber than they are, is getting rich and they aren't.
ote. 'cause it's really what [:It just means we're attracted. Our demand goes up when prices go down counter. And conversely, our [00:07:15] demand for goods and services goes down when prices are going up right counter, and we behave that way with every economic and, and, um, financial input except one that's investments in general and in particular, equities or stocks.
When the price of stocks is [:And the risk [00:08:00] of doing so buying at these lower prices has increased. So, of course, reality isn't different than what human nature thinks in this regard. It's the opposite. Just think about it, every year in this country. From Black Friday to Cyber Monday, everybody's [00:08:15] spending records, amounts of money, almost everybody.
e in the opposite direction. [:And by being aware of it and by thinking of, uh, of, of companies instead of stocks [00:08:45] and, and understanding that when the market goes down 30% or so, um, if I have a problem, uh, with, with not conflating price and value, just simply take a ride in the car, go to Starbucks, buy a coffee, go into the mall, [00:09:00] go to the Apple store.
y wife I know certainly, uh, [:And so keep those things in mind, get in the car, do those things. It'll help you to become more rational about the frequent. Sometimes [00:09:30] steep, but always temporary declines in the prices of the great companies that we own. What we need to do at the end of the day is a mechanical way to address this behavior as well.
s called rebalancing. So for [:And if each of the five represents initially 20% of my exposure. But one of them [00:10:15] disproportionately skyrockets in price. For whatever reason, it's gotten much more expensive and the other ones are now selling outta sale. What we do is we rebalance, we take that, uh, one that's gone up 40%, and we, uh, kick some of it out of the [00:10:30] portfolio and we take advantage of the, uh, sale prices of the other four, and then we rebalance to our, uh, prescribed targets that we set out with.
houldn't change unless their [:It's human nature. It's okay to be afraid. It's okay to to feel envy, but it's never okay for an investor who wants to succeed in the long term to respond to those emotions by changing their portfolio in response. So hopefully this podcast has [00:11:15] been helpful in helping you address the buy high and sell low behavior that many of us exhibit, if not always, often.
Friday. You can catch us on. [:Voiceover: [00:11:45] Thank you for tuning into another episode of The Crazy Wealthy Podcast. For more insights, resources, and to sign up for our newsletter. Visit Crazy Wealthy podcast.com. Until then, stay crazy wealthy.[00:12:00]
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