What’s Your Investing Persona? Why It Matters in Uncertain Times

Many people aren’t fans of market volatility – after all, who likes worrying about market declines? But it’s during those uncertain times that you really get to understand how you invest.

Most of us have a few behavioural tendencies that can hold us back when we see global tensions, economic slowdowns and rocky stock prices on the news. Recognizing those habits, though, can help you overcome any analysis paralysis and make your next move.

The question then is what type of investor are you? We break down five common investing personas – and you’ll likely see yourself in more than one – to help you identify potential behavioural biases and understand how they can work for, not against, you.

1. The Principal Protector

Typical behaviour: Quick to sell, watching every move

When markets get shaky, do you feel the urge to sell your investments to avoid further losses? Do you often find yourself refreshing your apps so you can monitor every market move? If the answer is yes, then this might be you.

Behavioural bias: Loss aversion and recency bias

For you, the pain of losing money feels much worse than the satisfaction of seeing your portfolio in the black. At the same time, it feels like recent market performance will continue indefinitely, which makes it difficult to keep current events in perspective.¹

The risk: Straying from long-term goals

Making decisions based on fleeting market movement or trends can cause you to miss out on potential gains when markets eventually recover.

The benefit: Being detail-oriented

You likely stay up to date on the latest market drivers and trends – and that can help you make more informed investment decisions.

What to consider: What’s really changed?

Rather than focusing on recent market performance, which could result in you making rash moves, ask yourself: has anything fundamentally changed with the investments you own?

2. The Noise Canceller

Typical behaviour:  Disengaging from the markets   

You tend not to check your investment accounts or follow financial news. You steer clear of conversations about the markets because they can be stressful. You’re not a fan of change.

Behavioural bias: Information avoidance, status quo bias

Those with a status quo bias tend to like to keep things exactly how they are.² Add an information avoidance bias – which is a tendency to actively ignore available facts because you want to avoid feelings like regret and anxiety³ – and you’re likely not doing much to your portfolio in a volatile market.

The risk: Making decisions without all the information

While everyone needs a break from the constant flow of information, fully disconnecting can lead to inaction or uninformed financial decisions. If there’s a fundamental change to one of your holdings but you don’t know about it, you may hang on for longer than you should.

The benefit: Not getting caught up in the hype 

Fortunately, you tend not to make decisions based on headlines or short-term market moves, which helps you stick to your long-term strategy.

What to consider:

If you don’t regularly check your portfolio, consider doing periodic reviews – say, quarterly or biannually – to ensure you’re still on track to meet your long-term goals. Catch up on the news once a week rather than every day.

3. The FOMO Investor

Typical behaviour: Tied into trends  

Did you jump on the latest meme stock craze? Do you like to buy stocks that are rallying? The Fear of Missing Out (FOMO) Investor pounces on the latest market trend to avoid feeling left behind. A recent study found 1 in 8 Americans say FOMO affects their investing decisions.⁴

Behavioural bias: Herd mentality

Your behaviour may be influenced by what others are doing or saying.⁵ If you see others benefiting from a hot stock, you might follow the crowd rather than sticking to your own investment plan.

The risk: Buying too high, portfolio concentration

Buying into a hyped-up investment could lead to purchasing an asset after it’s already seen big gains. This leaves less potential upside and greater downside if market sentiment changes. You might also unintentionally take on more risk by concentrating your portfolio too heavily in one area.

The benefit: Proactive positioning

On the flip side, you pay close attention to what’s happening in the market and are a proactive, engaged participant. Opportunities tend to pop up in volatile times, and you could have the information to jump on something that others may miss.

What to consider: Stick to your goals

It’s perfectly fine to take advantage of short-term opportunities, but you may want to make sure that what you’re considering fits within your bigger investment goals. Before buying into a popular area, evaluate whether the enthusiasm is supported by strong underlying fundamentals rather than recent performance or hype alone.

4. The News Junkie

Typical behaviour: Buying the headlines

You often feel the urge to rethink your portfolio when a big news story breaks – whether it’s a major policy decision or record-high company earnings.

The behaviour bias: Availability bias

With this bias, you might overestimate the likelihood of an event based on how easily examples of previous market events come to mind.⁶ News Junkies should be mindful of giving greater weight to recent news and events, as well as to anything memorable or widely discussed. Whatever happened last time is not necessarily going to happen again.

The risk: Reactive decision-making

Making frequent trades and reactive investment decisions driven more by the news cycle than by a long-term investment strategy.

The benefit: Staying well-informed

It’s often a good thing to be aware of the latest information and trends, which, if used properly, can help you make well-informed investment decisions.

What to consider: Focus on fundamentals

It can be helpful to pay attention to company fundamentals and the long-term trends that drive investment returns over time rather than just the latest headlines. Financial markets often price in new information very quickly, meaning that by the time news reaches the headlines, much of its impact may already be reflected in asset prices.⁷

5. The Disciplined Investor

Typical behaviour: Long-term decision making

You don’t make decisions based on headlines or daily market movements. You continue investing with the same approach regardless of market conditions.

Behaviour bias: Status quo bias  

Like the Noise Canceller, the Disciplined Investor likes the status quo. While avoiding change can help reduce emotional decision-making, it can also make you reluctant to revisit your strategy even when personal circumstances (like nearing retirement) shift.

The risk: Not adjusting when needed

Investors who rarely or never revisit their portfolios may miss opportunities to rebalance their investments and ensure their asset allocation still reflects their objectives.

The benefit: Keeping your eye on the prize

As a disciplined investor, you keep your long-term goals in focus and don’t let headlines sway your investment decisions.

What to consider: Review and rebalance

Reviewing your portfolio periodically and rebalancing your asset mix to keep it aligned with your target allocation can keep you on track to achieve your long-term goals.

Investor, know thyself

You likely see yourself in one or more of these investing personas and your investing style may evolve over time, too.

Just remember: every investor has behavioural biases, and no single investing style is inherently good or bad. But understanding which way you lean at any given point in time can help you make more informed and deliberate decisions.