How investors manage fear and greed
How investors control fear and greed Superior investors control fear and greed by managing emotions for better investment returns. By avoiding investment mistakes caused by emotional errors both risk management and stock market wealth building can stay on plan. By following the well established development steps of superior investors, anyone can do the same to improve their investment results.
What you learn from: Lesson 11 -
How investors control fear and greed:
Frequently Asked Questions about
How investors control fear and greed
How do you avoid making bad investments?
Investors know 4 Rules Avoid Bad Investments:
1. Build Knowledge - learn about markets and investing.
2. Plan & Research - learn how to plan and research.
3. Portfolio Build - use the Investor Portfolio Allow and Avoid Guide:
Allow these investments:
Paying returns (dividends)
Listed on major exchanges
Large established, profitable, growing companies
Buy, sell, and own at low or no cost
Avoid theses investments:
High front end costs
Exit costs or restrictions
Low liquidity or 1 source availability
Not easy to understand or fully understood.
4. Manage Holdings - check costs and performance
Manage costs
Monitor markets
Review performance
Successful investors avoid these bad investment mistakes, you can too.
For more details, discussion and FAQ see the lesson.
What is emotional investing?
Emotional powerhouses like fear, greed, and impatience, can bring investors to financial disaster! Emotional investing means thinking, decision making, and actions are based on feelings, not facts. That can produce panic selling, mindless buying, or inaction when something should be done. Emotional investment decisions can lead to huge investment losses! To avoid such disasters, learn how superior investors manage emotions by building their long term investment success on knowledge. For more details and fuller discussion and FAQ see the lesson.
How do I avoid emotional investing?
Use Four Defenses Against Emotional Investing Decisions.
First Know, make knowledge about markets and investing the base of your investing success.
Second Develop your investor brain by brain-training and developing an investor mind like a superior investor.
Third Plan with written investment goals and logging decisions in an investment journal to track progress to let reviews speed your growth.
Fourth Execute, know that you must take action and engage to make investment plans happen. Superior investors who develop and continue to learn, grow their investment success while well protected from emotional investment decisions.
For more details and fuller discussion and FAQ see the lesson.
Core Content
How investors control fear and greed
The How investors control fear and greed lesson Fear power can turn loose portfolio pulverizing actions that limit opportunity changes financial futures. That power must be know, understood and controlled for investment success. the game and The Investor fear and greed management lesson core shares superior investor knowledge and experience about THIS ClOSE INVESTING ISSUE .
Fear, greed and hope have destroyed more portfolio value than any recession or depression we have ever been through.
James O'Shaughnessy
Investor
More about James O'Shaughnessy, investor.
Investors can manage fear, greed and other emotions
Emotions, especially fear and greed can have a huge investment impact. And most often that impact is bad. Removing such investing risks begins by learning about investing and markets before trying to invest.
That makes knowledge the best antidote for emotional investment decisions that can quickly destroy investor wealth. Once you start building knowledge, never stop. Continue development of your investment and market knowledge and learn the skills of superior investors. That forms the base for your development into a confident successful investor able to control your investing behavior.
Investors that understand emotional risks are better able avoid the financial disasters caused by thinking, feeling or acting on feelings. The extreme risks from the power of fear or the high costs of greed can destroy wealth. That can cause panic selling at market bottoms. Always looking long term, superior investors manage emotions for risk control.
On your growing base of knowledge, take the following sensible steps that are common practice among successful investors. Four more practical steps that are helpful ways to control emotions:
First - Plan: Start by developing a well researched investment plan that fits you and commit to following it. Make your personal development as an investor a central part of your plan. Tailoring your plan to fit you and your goals with rules that also fit you must be central to your process.
Investors with the most success do not follow the cookie cutter plans offered by many financial service providers. They research and develop an investment plan tailored for them. Doing that means knowing your goals and setting up rules for your plan. Those goals and rules have to be both realistic for the markets and investing as well as fit you. Get qualified help to do this if needed. Independent fee only financial planners are well worth the cost.
Research, learn and use smart diversification in your plan. Also research and understand the concept of pyramid portfolio building. Use pyramid portfolio building as part of the plan for continual or progressive development of your lifetime wealth building project.
Second - Learn: Yes, again and still pushing knowledge! Learn and learn more. Continue to grow your knowledge of investing and stock markets so knowing and understanding them becomes part of you. Go at your own pace. In short order, you can learn enough to start.
For continued investment success, commit yourself to doing much more. Do as successful investors do, make continual learning part of your life to develop the knowledge and understanding needed for your investing success to last a lifetime.
Third: - Record: Write your investment record by keeping a log or journal of your trades and decisions. For each trade or decision made, write a one line account of the facts, your decision and reason or thinking. Record what and why you did or did not do.
That log becomes, for your eyes only, a private record. This learning tool gives you a way to track and review your investment history. Reviewing that record and your decisions in the following months and years, can speed your development as a superior investor. It makes you better.
During your regular review, say every 6 months, hold yourself to account. Review each decision and importantly, your reasons, seeing what you got right, wrong or could do better. Be a reasonable taskmaster. The purpose is not to beat yourself up but to learn. That is part of your continual improvement. Ask and keep asking, how can I do this better? As you develop new thoughts or decisions, make note of them in your log for future review and confirmation.
When markets, or life events, present good or bad circumstances or make changes, you can review. When priorities change, you can review and may need to change plans. Let your log record it all and how your expectations change. That sets up your future reviews for more learning.
Think of change as opportunity. Each time change happens, markets and life are presenting you with another opportunity to learn and grow. That includes another excellent chance to learn more about stocks, markets and yourself! Use each opportunity to review, consider, improve, change and learn. Like change, opportunities never end.
Fourth: Investor Mind: Developing your investor mind is a major step to becoming a superior investor for a lifetime of investing success. Like all parts of investing, it begins with knowledge, but moves to another level with brain training. Training your brain to become an investor brain puts you on your way to developing an investor mind. That is the base for the lifestyle of a superior investor. Training your brain can set you up for a lifetime of stock market investing success.
Understanding and controlling fear and greed
Fear and greed are the most powerful emotional forces that mind management controls. With just a thought of danger, pain or threat able to trigger a fearful response, we need to manage this power. Emotional forces pack the power to change how our bodies and minds work. Running, hiding or freezing behavior can happen when uncontrolled fear takes hold. While this valuable emotion can keep us alive and uninjured, it can also destroy. That destructive force can wipe out an investment portfolio.
Investors that manage greed and fear have more dollars in the end. Uncontrolled fear, greed and other emotions can destroy an investment portfolio. Emotional management avoids that.
Instead, investors can take control and manage emotions and turn them into allies. Informed investors, know, understand and manage emotions to get better investment results.
Emotions pack character challenging fearsome power
Fear can stop an investment opportunity in its tracks and freeze or even melt it to nothing. As a result, fear can bring the quick end to successful investing. Learning to control and manage fear gives us a deeper understanding of ourselves.
Understand the need for investors to manage fear
Managing fear comes with positive benefits for investors knowing, understanding and controlling fear. That discipline takes fear away as a controlling investment factor. Anyone holding an investing fear needs to identify the issue and deal with it.
All investors should be aware of any fear triggers they may carry. When not managed, fear can trigger damaging investor reactions to market behavior. That brings the danger of wiping out retirement comfort.
Learning how to manage emotions avoids making the panic responses that destroy wealth. Being informed can turn fear into a positive disciplined force. That force can serve as an excellent alert or early warning force, but not something to fear.
Emotional management and investor growth comes home
For each investor, managing fear and other emotions comes home. Active management of emotions is a core skill of successful investors. It forms part of the knowledge base for your stock market success. When applied with effective investing strategies, fear can serve as an alert system.
Investors that manage fear and greed have more rolls of cash for a better future.
Greed management helps grow wealth
For investing success, awareness of any fear triggers are important when investing. The highest risk fear response is a panic sellout during a market drop. By learning in advance, you will know what to do and how to do it well. Your financial future will thank you.
“Bulls make money, bears make money, pigs get slaughtered!”
Old Wall Street Maxim
Emotions including greed, impatience, fear and other emotions can warn investors. Emotions including greed, impatience, fear and other emotions can warn investors.
An investor warning system using managed emotions can respond to stock market action. That makes positive use of emotions while avoiding greed, impatience or emotional effects. With this we can manage emotions and what the market gives.
While the market has no feelings or concern for the thoughts or concerns of anyone or our logic, hope or desire.
For stock market success we stay grounded, in the moment and take what the market gives when we can.
Financial services fear swingers are predators, not allies,
Financial service providers have frequently used fear to sell. They offer numerous products to people wishing to avoid fear. The fears used include FOMO, fear of missing out!
Investors must stop to think when fear is used to get our attention. Make sure decisions you make are in your best interest.
As ego affects men more than women while touching both, fear touches both but affects women more than men. That makes fear a very powerful selling tool used against women. As a result, selling with fear harms women more than men.
Financial and emotional risks rise when dealing with selling fear.
We must be thinking consumers that must know and understand our ability to cope with the risks. Become a knowledgeable investor to guard against the bad effects of fear. Using fear to warn us by turning a possibly destructive force into a valuable and useful power.
Summary points Part III thinking, feeling and acting
- Control thoughts, feelings and behavior
- Train yourself to manage your mind
- That creates your psychological edge
- Psychology issues are the greatest investor risk
- Psychology risks can be learned and controlled
- Ego presents the biggest challenge needing control
- Successful investors concentrate on improving performance
- Investors must manage the relatives, fear and greed
- Successful investors learn to use fear and greed as allies
- Recognize when fear gets used against you
- Regret teaches well but we must sort the lessons
- Realistic, positives & uncertainty are in the mix
- Imagination helps mature investors see more
- Details matter and need management
- Change is normal, forever and here
- Learn, think, do, review and repeat opens the door
Lesson Takeaway:
How investors control fear and greed
Now you know:
Now, it’s your turn to apply the lesson:
How investors control fear and greed
Begin applying your new knowledge at your own pace. Taking the time you need to understand the lesson, helps you master the material. Then you can apply what you learned to take another step in your development as a superior investor. Have a prosperous day!
Comment or question:
How investors control fear and greed
You can email me at [email protected].
And subscribe for free to get White Top Investor lessons in your inbox!
Share: How investors control fear and greed
You may like lessons related to:
How investors control fear and greed
Learn how to begin building your investor mind here: The Investor Mind.
Mortal investors see immortal debt
Optimism and unrealistic investor minds
FED begins Quantitative Tightening
White Top Investor lesson links:
Brain Train for Investment Success
These Brain Train for Investment Success lessons are from the White Top Investor 1st Guide - Developing Your Investor Mind that shares superior investor knowledge about developing an investor mind.
Lesson links:
White Top Investor
Site Notes & Page Links
The White Top Investor site changes and updates without end just as stock markets and investing continue to change without end. For free access and email updates for notification of changes and additions. The key White Top Investor pages, the home page, the cornerstone page and the contents and layout page are linked below. These pages have links to all other content on the White Top Investor site.
Home Page Link
Cornerstone Content - Investor Mind
Featured Image courtesy: Pexels
WhiteTopInvestor.com
