Even a brief Internet search will bring you to expert web sites carrying articles, such as “Can your emotions kill you?” followed by “Five emotions that could kill you”. And if that is not enough there is “8 ways your emotions are killing you”.
If you believe you are a victim of your emotions, dozens of other experts will provide you with help to “consistently make positive life choices and channel the supremely potent energy charges triggered by your potentially sabotaging emotions.” You will soon be able to “think and reason clearly destructive-emotion-free.”
From the beginning you will learn that hurt, anger, disappointment, rejection, rage, betrayal, insecurity or hopelessness is your problem. When it comes to putting your money to work, others have identified the emotions that can limit your ability to invest for profits. Honestly, they get a little strange in my opinion.
You can miss out because of “shame” by avoiding to put your money into investments that are not “politically correct” or go against a person’s “moral compass” like pornography or medicinal marijuana. At least we do not have that problem in the Philippine stock market.
But, realistically, if you experience “envy,” you might try to buy the same issues that successful investor has bought, but then end up being late to the party. If you are into “pride,” then you have no business in the stock market because pride will keep you making the same mistakes over and over again.
If you are a stock market investor that wants to take fairly active control of your trading rather than buy and wait for the end of the next decade to sell out, the emotions that will damage your wealth are different.
The wise old saying, which you are perhaps used to, that the stock market runs on greed and fear is absolutely a portfolio killer. “Buy when others are fearful and sell when others are greedy” is one of those Warren Buffett quotes that people do not understand and costs money. That thought has nothing to do with the stock market. It has to do with when everyone is greedy to open a pearl shake kiosk, time to get out. When everyone is afraid that Filipinos will never buy Shawarma, it is time to get in.
Actually, your greed will get you in too soon because you think that the stock price is so cheap. And then it goes lower. Your fear will get you out too soon near the top because you are afraid of missing the profit. Both keep you from maximizing your profit.
The No. 1 negative and damaging emotion is regret. No, I am not talking about “The regret of my life is that I did not say ‘I love you’ often enough.” That has to do with a fool who could not find balance.
Regret is wanting to turn back the clock to do something differently and thereby being paralyzed. When it comes to your stock market investing, if you ever utter out loud the words “I should have/could have…,” your portfolio is doomed.
You bought an issue at P80 and it made a nice move to P100. But then it quickly went back down to P80. No reason to sell now because “I should have sold at P100.” At P70, you regret not having sold at P80 and this vicious and destructive pattern continues as the price continues to move down to P50.
The one emotional response to stock market investing that you absolutely must display is feeling humble. If you do not accept that you are not a stock market genius who knows everything, the stock market will slap you into being humble.
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E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.