We have all been victims of other people’s stock advice. “This stock is guaranteed to go up!” Sometimes the advice comes from a neighbor, or a close friend. It may even come from your own investment advisor.
Human nature gets us thinking. You don’t want to lose out on the potential gains. Without batting a rational eye, you invest. Most of the time the end result is much worse than you expected. However, you continue on and repeat this cycle over and over again.
What is wrong with our thinking? The answer is, for many of us, that emotions rule the day. They are so powerful that we often ignore our rational, logical thoughts. The hope for a quick buck or opportunity to “get rich quick” gets those emotional juices flowing. You must realize that it is not the rational side of our brain that is tripping us up, but the emotional side.
We tend to ignore many sound investment plans due to emotions. You can, however, quiet that emotional side that forces you to ignore your well thought out investment strategy if you work at it. You can learn to stick to your investment plan through both good and bad times.
Casual investors make the same mistakes over and over again because they cannot shake the demons that compel them. It is this type of trader that cannot overcome emotions while investing. They usually lack the ability to treat investing like a business and instead treat it like a game of poker.
The main driving emotion for many investors is the fear of losing money. The next is making a quick buck. Lets not forget to mention greed, the king of all emotions. All of these cloud judgment and prevent you from thinking clearly about how an action affects your portfolio. It doesn’t take long for disaster to strike when this kind of thinking is in play.
My emotions were extremely difficult to get under control when investing. I was finally able to control my emotions and let my logical side control my investment decisions. In order to do this, I developed a system that I use to invest with consistent success. I have certain parameters that I follow to guide me towards the right kinds of investments. It is a logical system in black and white. Now I remain focused and stick to my strategy even when that emotional beast tries to rear its head.
Don’t feel ashamed when you make poor investment decisions over and over. There is good news, you can change things starting now! I have had tremendous success investing in the stock market since I made that change. I also managed to do this when the stock market was in a sharp decline! Please believe me, all you need is a solid investment strategy and the will to keep your emotions in check to be a successful investor. Take the advise of someone that did that very thing!
