Better error control improves investor returns
Investors manage mistakes and regrets like superior investors use the 4 steps for managing investment regret to bring a financial loss to a positive resolution. These steps also come with a nice payoff of a quick return to wealth building. So after a loss, follow the 4 steps for managing investment regret:
Doing those things well ends the strong emotional grip of regret and loss. That, in turn, allows a freed mind to focus on positive investment thoughts and wealth building.
What you learn from: Lesson 12 -
Investors manage mistakes and regrets:
Frequently Asked Questions about
Investors manage mistakes and regrets
How do I deal with investment loss?
An investment loss can be a traumatic experience, especially for an inexperienced investor. But losses are part of investing and investors must learn to cope with both the emotional and practical burdens of an investment loss or mistake. When it happens, act fast to stop any ongoing loss, then pause to think. Settle your emotions and mind. Then use the 4 Steps to handling investment loss:
1. Think, regain your balance, and investigate what happened.
2. Learn, from the experience and feelings.
3. Accept, that it has happened and needs understanding.
4. Grow, by making the decision to find a solution, and deal with it.
By catching your breath, settling emotions, and taking control of the experience, you are ready to use the 4 Steps, learn and move on.
For more details, discussion and FAQ see the lesson.
How do investors manage investment and portfolio risk?
Risk management must consider both each individual investment and portfolio risk. For the individual investment risk use the One-two Risk Control Combo.
One - Research, homework lets investors use facts for informed decisions.
Two - Diversification, especially smart diversification provides risk protection.
For portfolio risk management investors have a long history of successfully using the 5 Time Tested Investment Risk Management Rules.
1. Learn - build investing success on knowledge and an investor mind.
2. Lifetime Timeline - make the investment lifestyle commitment.
3. Goal-Based Plan - research and use a goal-based investment plan.
4. Effective Engagement - be alert and actively monitor markets.
5. Persist - never stop, but persist to produce plentiful profits.
For more details, discussion and FAQ see the lesson.
How do I let go of financial regret?
Lingering financial regret seriously handicaps an investor. Move beyond regret to successful investing by doing the following
6 Steps to move beyond financial regret.
1. Acknowledge and accept that the loss or mistake happened,
2. Vent to express yourself and relieve the pressure,
3. Research to get understanding, not anger about what happened,
4. Come to a conclusion and accept the lessons learned,
5. Shake it off, let go of the mistake and move on,
6. Make changes to learn, grow, and avoid repeating the error.
For more details and fuller discussion and FAQ see the lesson.
Core Content
Investors manage mistakes and regrets
The Lesson name here lesson name here shares teaches or gives first paragraph of lesson content
Your capacity to learn
from your mistakes
and move on
will be key to your ultimate
success and achievement.
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Regrets can pack a powerful punch
Financial regrets are a powerful emotional force that must be managed to minimize loss and wealth destruction. Superior investors manage loss and regrets to set up for more wealth building success. Realizing an investment decision was a mistake can bring the challenge of managing regret.
When investors manage regrets and recovery well, improvements quickly minimize the financial loss and limit risk exposure.
Loss management happens in four steps:
- 1Recognize and acknowledge the strong feelings experienced in loss.
- 2Accept the loss to move past any regrets, shake it off.
- 3Take the time to learn from the loss into a growth moment.
- 4Make learning to move past loss, part of your growing investment experience, power and skill.
Accept, Reflect, Rewind, Forgive
Know the plan and get at it! First, accept it and shake it off, if trading, stop, until you learn what happened. Then get on with it. review and redefine your goal, adjust the plan developing as needed, then continue your action with moving on. the plan, act and learn. For details and more discussion see the lesson.
- Own Your Mistake. Don't blame somebody else. ...
- Forgive Yourself and Move On. I get it—forgiving others is a whole lot easier than forgiving yourself. ...
- Let it Motivate You. Regret is a useless emotion unless you respond to it with action and a willingness to change. ...
- Tell Your Story and Help Others.
- Own Your Mistake. Don't blame somebody else. ...
- Forgive Yourself and Move On. I get it—forgiving others is a whole lot easier than forgiving yourself. ...
- Let it Motivate You. Regret is a useless emotion unless you respond to it with action and a willingness to change.
- Tell Your Story and Help Others.
For details and more discussion see the lesson.
Controlling risk exposure
Knowledgeable investors can control their risk exposure. Risk directly relates to what you invest in. Smart diversification is a superior investor skill that helps control portfolio risks that investors can learn.
The best behavior control for investors begins with education and training. Build your knowledge of investing and train your brain to build an investor mind. That puts you on the path to superior investor success with the knowledge, skill and ability to control your investor behavior.
Financial regrets are a powerful emotional force. First, accept it and shake it off, if trading, stop, until you learn what happened. Then get on with it. review and redefine your goal, adjust the plan developing as needed, then continue your action with moving on. the plan, act and learn.
Knowledgeable investors can control their risk exposure. Risk directly relates to what you invest in. Smart diversification is a superior investor skill that helps control portfolio risks that investors can learn.
The best behavior control for investors begins with education and training. Build your knowledge of investing and train your brain to build an investor mind. That puts you on the path to superior investor success with the knowledge, skill and ability to control your investor behavior.
Grow your investment power and skill. Growth opportunities increase their investment power and skill. Using the reality of a loss as a growth opportunity increases investment power and skill.
And because, we may do it again, forget about saying never again!
Always accept the reality of what you regret. When you know how to cope, managing regrets can add to your investing power and skill. regrets and recovery.
Operating as an investor must always manage themselves in uncertainty. Accepting what happens and moving on. getting alone or going along. means you in uncertain times Sorting through regret and regrettable lessons. Fear of regret or regret theory deals with emotional reactions to experience. Managing investment regrets makes recovery fast and improves stock market performance -
Imagination
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Getting real to deal with the uncertainty of life brings more success, better future and fatter bottom lines
A helping hand can help an investor learn and get past errors and mistakes without regrets. Investor mind management includes knowing when to get along and when to go along. Memory and minds can play tricks on us. Always check the records for the facts.
Understand and managing investor regret
Realizing we made an judgement or decision error can come as a shock. When is involves investments in a stock, selling that stock can be an emotional experience influenced by the price we paid for it. That can mean avoiding selling to hide from the admission we got it wrong! Not only have we made the investment mistake but we are adding to it and keeping that money dead.
To bring the money back to life and putting it to work producing returns, we have to act and sell it to end the mistake and move on to something positive. So if you would not buy more of that stock, it is time to learn, sell, and move on from that regret.
Regret and running winners
Regret can also work against an investor decision to buy a winning stock. That can happen when a stock we are interested in rises in price before we buy. Regret comes to play when we avoid buying that rising winner because we do not want to regret not buying it at the lower price.
That regret keeps many investors away from winners and able to buy only what everyone else is buying. Such investors follow the herd but can never be at the front or outperform. In fact that approach locks them into a pattern of consistently underperforming the market and herd.
As strange as it seems, some people feels better about losing money on a popular stock rather than making money on less well know rising stocks that winning investors ride to wealth.
Recognizing and dealing with regret to get on with growth
Our brain wiring helps us learn from experience. Especially bad experiences, losses and worries, drive us from repeating mistakes. Easily recalled bad experiences, keep us well motivated to avoid the pain of a repeat.
The powerful and remembered lessons of this rough and tough teacher are usually fair. But the lessons are not sorted good from bad. Regret teaches both! So we must sort the lessons, especially in stock market investing. Experience can teach new investors bad stock market lessons!
That takes homework and effort. In the stock market, at times, even a good solid plan can fail. Bad luck and unpleasant surprises are part of stock market investing. For each failure we check our work to see what we can learn. Check to see that regret is not bringing us any poor lessons that could produce bad decisions. Each time, we deal with it and carry on.
Learning from loss and regret makes us better investors
An essential superior investor skill is the ability to move on. When errors, misfortune or losses happen, we need to get them behind us. That includes being able to manage regret. When regret follows a good decision, we risk learning to miss an opportunity.
It can be when the surprises of markets and life happen. Each time we must deal with it and shake it off to carry on. We have to learn to live with mistakes, to acknowledge them, but not to dwell on them. When we discover the better or best choice we can not waste time or energy feeling bad about our mistake. Rather, think through and manage loss and regret to make experience a powerful ally.
People unable to move beyond a mistake and leave regret, must not manage your own investments. Instead, get a trusted financial advisor and let them take on the responsibility.
Emotions are the core drivers of our human behavior. For stock market success we must manage the feelings and psychology that makes us tick.
At times, stock markets can be uncertain and volatile. That reality can make being both realistic and positive a challenge. And that can stir our feelings which are always part of us.
At such times a reminder can help. Our thoughts, feelings and actions all accept the world and stock market as it is. Even what we do not like or wish to change, we accept as is. At least for now, because we must deal with what is, not what we hope it can be.
Getting to know denial grows our skill
Denial is another psychological issue for some people. Accepting reality challenges them. Investors must avoid that expensive luxury!
When suffering from denial, there are three possible solutions:
- get an honest and trusted critic
- change your point of view
- think, deal with the facts
Anyone striking out on all three should not manage their own investments. Turn them over to a trusted financial advisor.
Knowing when shake it off time has arrived!
In life and stock markets bad things can happen. We must deal with bad choices, bad luck, bad markets and bad results. Regret, our teaching emotion, may help us. Or, knowing even good choices don't always work out, we must also deal with it and move on!
Find, manage and use the positives to move along
In general, successful investors are positive people. What sort of person are you? Agreeable, pleasant and easy going or more difficult and challenging? Generous and trusting or suspicious and guarded? Do you have time for others or keep to yourself?
Investors are not Pollyanna clones. However, carrying a positive attitude and frame of mind works well and takes less energy. When it comes to cooperation, simply put, women are more cooperative than men. Men are more inclined to challenge those around them.
Investors inclined to readily cooperate, be more challenging by considering taking more risk. Take any change in careful steps, but when done well, risk management can increase returns.
On the other hand, for investors inclined to trade, but not showing improved results, make a change. Trade like most women, that is less. Ride investments rather than trading them. Remember, time in the market pays far better than timing the market.
For someone who is difficult or challenging, hold on the trading. Trading costs more but adds less to portfolio results than riding an investment does. And always, check and believe the numbers. Our memories can be kind and remember what did not happen. Trust your records to show the real numbers. Believe them and act on it.
Restart when the bad happens
We want certainty but can't have it in a world of uncertainty. Some react with anger, others with fear when faced with uncertainty. Thinking like a . Superior investors recognize and bring under control any certainty bias. That awareness lets us manage our behavior. Facing uncertainty, thinking and making intelligent decisions, brain-trains this positive behavior. That keeps us positive.
Managing negatives and uncertainty lets us grow
With money at stake, stock market movements can produce anxious and uncertain moments. Investors accept that fact of life. For people unable to deal with uncertainty, don't manage your investments. Investing is no fun if you fill with worry, irritation or concern whenever you think about it. Such people should not manage their own investments. Get a trusted financial advisor.
The best stock market investing success, needs awareness of markets and world matters. When the big picture and details pass you by unaware, do not manage your own investments.
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:
Investors manage mistakes and regrets
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Investors manage mistakes and regrets
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Investors manage mistakes and regrets
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