By Staff Reporter
Experienced stock traders are all too familiar with the thrill of seeing their investments yield positive returns. However, even the most seasoned investors can fall prey to emotional reactions during sudden market downturns.
With recession fears looming, many investors might feel tempted to sell off their assets at the first sign of trouble. Yet, Kenny Polcari, host of the Trader Talk podcast and a veteran trader, cautions that allowing these fears to drive trading decisions can “destroy your portfolio.”
“The markets don’t care about your feelings,” Polcari stated in a recent episode of Trader Talk. “They don’t care if you’re afraid, hopeful, angry, or desperate. Market movements are based on fundamentals, earnings data, and economic realities.”
He further emphasized that trading based on emotions is “a recipe for disaster.”
It’s understandable why even veteran traders might want to exit the market quickly. Just last Friday, JPMorgan became the first Wall Street bank to predict a recession in 2025, while Yardeni Research increased its odds of a recession to 45%.
“I see it all the time,” Polcari noted at the start of the Trader Talk episode. “Traders jump in, feeling euphoric and chasing momentum, only to panic when the market turns. The truth is, trading on emotion is a surefire way to lose money consistently.”
“If you want to succeed, separate emotion from action,” Kenny Polcari advised. “Make decisions based on strategy, discipline, and analysis, not impulse. Define your entry point, set your stop loss, and know your exit before you even hit the buy button.”
Adjusting trading strategies based on analytics can be challenging, especially as the U.S. market becomes more unpredictable. Kristina Hooper, chief global market strategist at Invesco, acknowledged that the 2025 outlook released in November 2024 was “probably fairly conventional.”
“Our expectation was that we would avoid a global recession and that the U.S. would too,” she explained. “We anticipated a modest slowdown followed by a reacceleration in growth, along with other developed Western nations.”
However, she noted that external factors such as tariffs, a potential trade war, China’s stimulus measures, rising inflation, and government spending cuts were also in play. “We never expected all four of those swing factors to come to fruition at the same time,” she admitted.
Despite the uncertainty, Polcari emphasized that making informed decisions is crucial for maintaining steady and profitable returns over the long term.
“The reality is, the market doesn’t care how you feel,” he said. “It rewards calm, disciplined traders who stick to their plans and punishes those who panic or chase euphoria. Bottom line: Check your emotions at the door, or be ready to pay a steep price. Treat trading as a business, not therapy. Keep your head, maintain your discipline, and stay profitable.”
