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When It Comes To Investing, Leave Your
Emotions Out Of It
by: Franco Smeaux
When it comes to investing, leave your emotions out
of it.
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When it comes to many areas of your life you can rely on your
emotions and instincts or gut feelings. But when it comes to investing in the
stock market this is a big mistake. Not many people are able to use
their instincts to make successful trades. So if the professional investors
can’t do it then you shouldn’t fool yourself into thinking you can,
especially if you a beginning investor. You need to invest with a proven strategy
that has its foundation backed by fundamentals and solid research.
The same is true for your emotions. Most investors
are driven by two main emotions, namely fear and greed. And, as has
been proven time and again, using fear and greed to guide your investment decisions
will usually lead you to lose money.
When you see a negative news story about a stock in your portfolio
and you fear for your money, you may rush to call your broker and scream “SELL,
SELL, SELL!” Without a second thought. This is a serious error. You are
not making a rational decision by doing this. Emotions have
no place in trading.
I am certainly guilty of this myself. I was watching CNBC one
day about one of my stocks and the news was not good. My stock was down 25%
in one day! I sold. Then I sat down and took a step back to see how bad the
news really was. The stock was punished too severely. The news was nowhere as
bad as I thought it was. Life went on and the “grey clouds” passed
over the company.
The worst part was that I never bought back into the company
and missed as it zoomed from $8 to $28! Only a 350% gain I missed out on because
I let fear and greed make my investment decision.
The point is whenever fear or greed is involved, you
will lose.
Another big emotion that can prevent you from making good investment
decisions is love; falling in love with the company you have an investment in.
When the stock is falling due to the fundamentals and the business is no longer
viable and it comes time to dump it, you need to be able to do it without blinking.
If you can’t separate your love from the company then it will cost you
big. Try to never get attached to any of your investments.
You became an investor for one reason and one reason only...to make money.
You are not investing because you love the stock or because
you enjoy the rush. You are doing it only to make money. Period.
Never get emotionally attached to anything you invest in. Because if you do
and can’t separate yourself from the stock then you’ll never make
any money because the only way you’ll make any real money is when you
actually “sell” the stock.
Other articles you may find interesting:
You can get wealthy investing in the stock market as long
as you can keep your head on straight and leave your emotions at the door. Franco
Smeaux is the owner of Lux Investing, a premier resource for investing information.
For more information, go to www.luxinvesting.com
*The articles published on this site undergo our review
process. We found the information in this article to be very useful and informative.
The source website does not necessarily reflect our website. We have linked
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