Emotional Neutrality: The Crash Buying Skill That Matters More Than Market Knowledge

Markets shrug off Powell investigation to close at records amid political drama

The quick scan: US stocks rallied off session lows on Monday to close at fresh record highs despite extraordinary political tensions as the DOJ opened a criminal investigation into Fed Chair Jerome Powell. All three major indexes recovered from steep early losses, with the S&P 500 and Dow notching new all-time closing highs in a dramatic display of market resilience.

S&P 500: +0.16% to 6,977.27 – The broad market index touched a fresh intraday record before closing at an all-time high, recovering from a 0.5% session low as investors looked past constitutional drama to focus on earnings season ahead
Dow Jones: +0.17% to 49,590.20 – Blue-chip stocks added 86 points to reach another record close despite being down nearly 500 points at the session's worst, with Walmart's 3% surge offsetting financial sector weakness
NASDAQ: +0.26% to 23,733.90 – The tech-heavy index joined the recovery party as AMD and Oracle rallied over 3% on AI optimism, though the index underperformed both the S&P and Dow.

What's driving it: Monday's session proved almost surreal as markets absorbed news that grand jury subpoenas were issued to Fed officials over the central bank's headquarters renovation – an investigation Powell called political retaliation for not cutting rates as aggressively as President Trump demanded. Financial stocks tanked following Trump's separate proposal to cap credit card interest rates at 10% for one year, sending Synchrony Financial down 8%, Capital One down 6%, and major banks (JPMorgan, Citi, BofA) down 2-4%. Yet the S&P 500 and Dow still managed record closes. The market's "buy the dip" reflex overwhelmed constitutional concerns, with retail investors deploying cash reserves (at 98th percentile historically) the moment headlines created price dislocations. This represents what some analysts call "headline desensitization" – after two years of political shocks, investors simply assume volatility creates buying opportunities rather than systemic threats.

Bottom line: For L-Plate Retirees, Monday's price action demonstrates both the market's remarkable resilience and its concerning detachment from fundamental risks. When an investigation into the Fed Chair can spark a 500-point Dow drop that fully reverses by the close, we're witnessing either impressive conviction or dangerous complacency. The ability to absorb political uncertainty and reach new highs suggests strong underlying momentum, but it also reveals how much faith markets have placed in the "Fed put" – the assumption that eventually policymakers will deliver the rate cuts investors demand. This works beautifully until it doesn't. The lesson isn't to panic sell, but to recognize that emotional neutrality matters more than ever when markets can swing 500 points in a session over non-economic news. Stick to your system, maintain your rebalancing discipline, and remember that record highs built on ignoring institutional risks have a way of requiring eventual accounting.

Why Smart Investors Lose and Calm Ones Win

The scoop: Ask anyone what stops them from buying during a market crash and you'll hear the same answers: fear of losing money, worry prices will fall further, panic about timing it wrong. Every response points to the same problem – and it's not a knowledge problem.

When markets crash 20%, investors know intellectually that buying during declines has historically generated wealth. They've read the statistics. They understand compound returns. They can quote Warren Buffett's "be greedy when others are fearful" line from memory.

Then the crash actually happens, and they freeze.

This disconnect – between knowing what to do and actually doing it – reveals the single most important truth about successful investing: it's not a knowledge skill, it's an emotional mastery skill. Your brain might understand market cycles in a week, but your emotions? That's a different battle entirely.

The Cycle That Destroys Returns

Let's walk through what actually happens emotionally during a market cycle, because understanding the pattern is the first step toward neutralizing it.

During a bull run, excitement and greed dominate. The market climbs steadily, your portfolio grows, and suddenly that voice whispers: "Maybe I should buy more before I miss out." Every green day reinforces the urge. You feel smart, vindicated, and increasingly confident.

When markets go sideways, confidence morphs into overconfidence. Nothing dramatic happens, so you assume you've figured it out. The emotions are quieter here, but they're setting you up for what comes next.

Then the crash hits. Ten percent down becomes twenty percent down. News headlines scream crisis. Your portfolio that looked so healthy last month is suddenly deep in the red. Now fear arrives – not the abstract "I should be careful" kind, but gut-wrenching, sleep-disrupting panic. The urge to sell everything and preserve what's left becomes overwhelming.

If you manage to buy during the crash, congratulations – you've cleared the first hurdle. But then markets fall another 5%, and regret kicks in hard. "I should have waited." News outlets predict further declines. You bought what feels like a falling knife, and now you're bleeding.

During the recovery phase, as markets slowly climb back, new torment arrives. Every small gain makes you wonder if you should sell before the "dead cat bounce" reverses. Every dip makes you question whether the recovery is real. This phase can last months or even years, and the emotional toll accumulates daily.

Finally, the bull run returns. Your patience paid off – except now greed resurfaces. Should you buy more? Should you sell and lock in profits? The cycle begins again.

Notice something? Not one of these challenges requires additional market knowledge. They're all emotional responses to price movements. The solution isn't learning more about P/E ratios or reading another investing book. The solution is building emotional neutrality.

What Emotional Neutrality Actually Means

Emotional neutrality isn't fearlessness. If you're naturally cautious, you'll always be cautious. If you're optimistic by nature, that won't change. Attempting to suppress or ignore your emotional wiring fails because you're fighting human nature – and human nature always wins eventually.

Instead, emotional neutrality means accepting that you're fallible and building systems to neutralize emotions before they destroy your returns. You don't suppress fear – you design around it.

Think of it this way: most married people don't avoid infidelity through willpower alone. They build systems – not spending time alone with tempting situations, maintaining transparency with their spouse, avoiding scenarios where emotions could overwhelm judgment. They accept they're fallible and act accordingly.

Investing demands the same approach. You accept that during crashes you will feel panic, during bull runs you will feel greed, and during recovery you will feel doubt. Then you build systems that make those emotions irrelevant to your actions.

The Heavy Hammer Strategy

The single most effective system for crash buying is what Mr Loo of Singapore’s 1M65 Movement call the "heavy hammer" concept. During preparation phases – before any crash – you accumulate cash in boring, low-return accounts. Money market funds. Savings accounts. Anywhere it earns almost nothing and makes you mildly uncomfortable holding it.

That discomfort is the point. As months pass and your "dry powder" grows, that cash becomes like holding a heavy hammer. Your hand gets tired. You want to put it down, to deploy it somewhere productive. The weight builds psychological pressure.

When the crash finally arrives, you've been waiting so long that the relief of finally using that capital overwhelms the fear of catching a falling knife. The hammer was so heavy that slamming it down feels good, even as others panic.

Compare this to having no prepared capital during a crash. Now you're trying to buy while simultaneously finding cash, managing fear, and making investment decisions. That's asking your emotions to perform under maximum stress – which is exactly when they fail hardest.

Strategic Disengagement

Once you've deployed capital during a crash, the next critical system is disengagement. Not checking prices. Not reading financial news. Not monitoring your portfolio daily or even weekly.

This sounds simple but proves brutally difficult in practice. The urge to check "just once" becomes intense, especially during volatile periods. But every time you look, you're inviting emotions back into the process. You see red numbers and panic resurfaces. You see green numbers and greed whispers "maybe sell now before it reverses."

Women statistically outperform men in long-term investing partially because they check portfolios less frequently. Not because they're smarter about markets, but because they have other priorities competing for attention. Men often obsessively monitor positions, frightening themselves with daily volatility.

The system: after buying during a crash, delete your broker app. Block financial news sites. Find hobbies, work projects, or family activities that consume your attention. Strategic disengagement isn't avoidance – it's deliberately removing opportunities for emotions to interfere with a plan you made when thinking clearly.

Rule-Based Rebalancing

Eventually markets recover and enter bull runs. Now you face the opposite emotional challenge: greed and fear of missing out drive you toward buying more, while prudence suggests taking profits.

The system here is mechanical rebalancing based on predetermined rules, not feelings. A simple version: your age roughly equals your bond allocation percentage. If you're 60, aim for 60% bonds/cash and 40% stocks. When stocks surge and that ratio hits 70/30, sell stocks and buy bonds until you're back to 60/40.

Or take a fixed percentage of profits – say 30% – whenever your portfolio hits predetermined milestones. Remove emotion by making the decision in advance, then executing mechanically regardless of how you feel when the moment arrives.

The rule matters less than having one at all. Any consistent, predetermined system prevents you from making emotional decisions during emotional moments.

Why This Matters More After 55

Younger investors can afford to learn emotional discipline through experience – they have decades to recover from mistakes. At 55 or 60 with retirement approaching, you don't have that luxury.

One panic-driven sale during a crash, or one greed-driven purchase at market peaks, can derail years of careful planning. The dollar amounts are larger, the timeline is compressed, and the consequences of emotional mistakes compound faster.

Building emotional neutrality now – through financial safety nets that reduce fear, heavy hammer capital accumulation, strategic disengagement systems, and rule-based rebalancing – isn't optional preparation. It's the difference between retiring comfortably and working years longer than planned.

Actionable Takeaways for L-Plate Retirees

• Build your financial safety net before you need it: Calculate 6-12 months of living expenses and keep them in completely safe, accessible accounts. This isn't investing capital – it's emotional armor that lets you take investment risk without panic.

• Start accumulating your "heavy hammer" now: Even if no crash is imminent, begin directing bonuses, raises, and extra income into boring cash accounts earmarked for crash buying. Let the psychological weight build over months until deploying it feels like relief.

• Write your buying rules while markets are calm: Decide now what percentage drops trigger purchases (20%? 30%?), how many tranches you'll deploy, and what you'll buy. When panic arrives, follow the plan you made when thinking clearly.

• Delete portfolio apps after deploying capital: Seriously. Remove them from your phone. Block financial news sites if necessary. Strategic disengagement only works if you actually disengage, not just promise yourself you'll "check less often."

• Set rebalancing rules and calendar reminders: Pick a simple rule (age = bond percentage, or take 30% profits at milestones), set quarterly calendar reminders to check if rebalancing is needed, then execute mechanically without second-guessing.

• Accept that timing will be imperfect: You will not buy at the exact bottom. Prices will likely fall further after your first purchases. This is normal, expected, and irrelevant if you're buying in tranches and planning to hold for years. Regret is part of the process – design around it, don't fight it.

Your Turn:
When you imagine markets crashing 20-30%, which emotion worries you more – the fear that stops you from buying, or the regret after buying if prices fall further?
Have you ever made an investment decision driven primarily by emotion (fear or greed) that you later regretted – and what would a "system" have prevented?
If you couldn't check your portfolio for six months after investing during a crash, would that make you more or less likely to actually buy when the opportunity comes?

👉 Hit reply and share your thoughts – your answers could inspire fellow readers in future issues.

If this breakdown of emotional neutrality helped you understand that successful investing is about systems, not willpower, consider supporting L-PLate Retiree on Ko-fi. Your contribution helps us deliver the psychological insights about investing that most financial advice completely ignores.

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