Is Winter a Risk that You would Rather not Take?

Winter can leave you stumbling in the dark when it comes to financial decisions. Here's why...

Seasonal Affective Disorder can influence you in ways that you may not even consider. I remember reading that unemployment rates are high amongst those who suffer from S.A.D. due to their inability to perform according to normal standards during winter.

Apparently not only can the seasons affect your mood, but also your tolerance for risk. Read below for more information:

This is Your Portfolio on Winter: Seasonal Affective Disorder and Risk Aversion in Financial Decision Making

The study seems to indicate that those affected with S.A.D. are more concerned about financial risk during fall and winter, but more open to potential risk during spring and summer. I am no doctor, but I can understand these findings for at least a couple of reasons.

First of all, being that S.A.D. is a form of depression, during low-light months our outlook on life is diminished. We may become not only more down, but also more pessimistic. Likewise, during the better time of the year, we may feel more bright and sunny with a better outlook on life and a renewed sense of optimism.

Another reason that these findings may make sense is due to the nesting instinct that affects many people during cooler, darker days, whether they happen to be affected by S.A.D. or not. We instinctively desire to build up our resources during cold weather, and in doing so, derive some comfort that helps us to make it through the tough seasons. The concept of the market with its ups-and-downs may prove to be unbearable to someone who is trying to hold onto everything they have as a matter of survival.

The jury is still out as to whether you are wiser to be making serious financial or portfolio decisions during winter or summer. Decisions made in winter can be too safe to prove worthwhile; decisions made in summer may be too reckless to achieve your ultimate goals. Especially when it comes to finances, it is preferable to determine your course of action whenever you personally feel the most in balance. Or another option is to weigh your feelings on the issue throughout the various seasons to gather a general consensus of which direction you should go.

Balancing your portfolio may be a task best left to when you are feeling balanced.

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