| You Need To Check Your Emotions At The Door Before You Invest In The Stock Market |
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| Written by Marc Abrams |
| Tuesday, 11 August 2009 13:08 |
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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.
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. Why do we continue to think this way? The answer, for most of us, is that our emotions take control of our decisions. They manage to force us to ignore our logical, rational thoughts. The opportunity for a quick dollar or hope to "get rich quick" heightens our emotional thinking. Please realize that it is the emotional side of our brain that is messing us up, not the rational side. Many sound investment plans get ignored due to emotions. If you work at it, you will be able to quiet that emotional side that is prone to ignore your well thought out investing strategy. More importantly, you'll be able to stick to your plan through both good and bad times. Some investors, however, cannot shake the investing demons that compel them into making the same mistakes over and over. It is the casual trader that has the most trouble overcoming emotions in investing. They often lack the experience that allows them to treat investing like a business, and not like a game of poker. The main emotion driving many investors is the fear of losing money. Making a quick buck is the next one. Don't forget about the king of all emotions, greed. These emotions cloud your judgment and don't allow you to clearly see how a particular decision affects your portfolio. When this type of thinking is in play, disaster can strike rather quickly. When investing, I had a difficult time getting my emotions under control. I was finally able to control my emotions and let my logical side control my investment decisions. To help me do this, I developed an investment system that I use over and over with consistent success. I have certain parameters that I follow to guide me towards the right kinds of investments. This system is black and white, very logical. Now I remain focused and stick to my strategy even when that emotional beast tries to rear its head. There is no shame in making poor investment decisions over and over. The good news is that you can change things starting right now! I made that change and as a result I have been more successful than I ever have been investing in the stock market. I also managed to do this while the stock market was in a free-fall! I promise you, to be a successful investor all you need is a solid investment strategy and the ability to keep your emotions checked at the door. Please, take the advice of someone that did that very thing! DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Marc Abrams is a CPA with over 15 years experience in financing and investing. Visit Marc's website to learn more about successful stock market and option trading strategies that will get your retirement back on track. |