Investing with emotions can be costly
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Financial discipline is crucial to the process of handling investing emotions. Successful investors understand stock market psychology, and train themselves to identify their emotional impulses and address them with a critical eye. Decisions to buy, sell, or hold stocks should be systematically informed by market analyses, and savvy investors will take the time to review their potential trades to ensure consistency with their overall investment strategy.Disclaimer: The contents of this article are provided for educational purposes only and are not intended to be investment, tax, or legal advice. Any action taken upon the information on this article is strictly at your own risk. Readers interested in obtaining investment advice should consult a duly licensed investment advisor.
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@danielhoweller said in Investing with emotions can be costly:
Financial discipline is crucial to the process of handling investing emotions. Successful investors understand stock market psychology, and train themselves to identify their emotional impulses and address them with a critical eye. Decisions to buy, sell, or hold stocks should be systematically informed by market analyses, and savvy investors will take the time to review their potential trades to ensure consistency with their overall investment strategy.Disclaimer: The contents of this article are provided for educational purposes only and are not intended to be investment, tax, or legal advice. Any action taken upon the information on this article is strictly at your own risk. Readers interested in obtaining investment advice should consult a duly licensed investment advisor.
Optimism and pessimism affect investor psychology as well. For example, when investors hear great news about a company, they may tend to overreact based on the belief that the news will have a positive impact on the business. Likewise, negative news may result in extreme pessimism that often causes investors to overreact in the other direction, leading investors to sell their positions at a loss. The result is significant short-term price swings that may not be directly related to the actual growth potential of a given stock.
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@danielhoweller said in Investing with emotions can be costly:
Financial discipline is crucial to the process of handling investing emotions. Successful investors understand stock market psychology, and train themselves to identify their emotional impulses and address them with a critical eye. Decisions to buy, sell, or hold stocks should be systematically informed by market analyses, and savvy investors will take the time to review their potential trades to ensure consistency with their overall investment strategy.Disclaimer: The contents of this article are provided for educational purposes only and are not intended to be investment, tax, or legal advice. Any action taken upon the information on this article is strictly at your own risk. Readers interested in obtaining investment advice should consult a duly licensed investment advisor.
Optimism and pessimism affect investor psychology as well. For example, when investors hear great news about a company, they may tend to overreact based on the belief that the news will have a positive impact on the business. Likewise, negative news may result in extreme pessimism that often causes investors to overreact in the other direction, leading investors to sell their positions at a loss. The result is significant short-term price swings that may not be directly related to the actual growth potential of a given stock.
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@danielhoweller said in Investing with emotions can be costly:
Financial discipline is crucial to the process of handling investing emotions. Successful investors understand stock market psychology, and train themselves to identify their emotional impulses and address them with a critical eye. Decisions to buy, sell, or hold stocks should be systematically informed by market analyses, and savvy investors will take the time to review their potential trades to ensure consistency with their overall investment strategy.Disclaimer: The contents of this article are provided for educational purposes only and are not intended to be investment, tax, or legal advice. Any action taken upon the information on this article is strictly at your own risk. Readers interested in obtaining investment advice should consult a duly licensed investment advisor.
The pressure to reach positive returns on an investment may be felt with particular intensity by those who are increasingly falling behind in their efforts to reach their financial goals, like those looking to retire while maintaining a certain lifestyle, are burdened by high levels of debt, and for those who have already lost money on other investments. This may prevent investors from carrying out their financial analyses with the necessary peace of mind, since their decisions may be significantly influenced by a strong need for positive results.
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How to Make Money in Stocks: A Winning System in Good Times and Bad, by William O’Neil. This book provides an organized way of combining the analysis of quantitative and qualitative factors associated with market movements, along with information to identify when it may be the right time to buy stocks. Stock market books
