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How superior investors manage emotions

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First, Knowledge: Investing time and effort needed to expand and grow your knowledge about stock markets and investing must also include learning how to manage yourself. By growing in knowledge about yourself, markets and investing you grow your emotional control and management. At the same time, as you develop greater knowledge and understanding you get another positive effect. That is, as you grow in knowledge and experience, the emotional pressures on your investment decisions become far less significant. When you know, there is less unknown that raises anxieties. That lowered emotional burden frees you for greater investment success as you add another wealth building skill!

Second, Plan: When investors have a plan, many potential problems and issues are avoided. Superior investors research and make a plan and just as importantly, they follow it. Then when volatility hits or exciting times and events happen, they are ready. Rather than getting caught up in emotions, they know and understand the risks that happen to the unprepared. The plan serves as a compass or guiding light that can be used to reach through any period of turmoil or disruption. Following a plan keeps us from falling victim to any emotional traps or decisions. 

Third, Research: Learning to invest well includes developing your skills to research both investments and do due diligence. In part, that includes learning how both markets and investors react and behave in all circumstances. That quickly brings investors face to face with their own emotions. Emotions carry a powerful impact that can leave investors vulnerable to making bad investment decisions. Among the powerful reactions connected to emotions is the intense psychological pain financial loss can bring. Any investor feeling the emotional pain of financial loss can be vulnerable to making rash emotional based decisions.

Experienced investors know and accept that any financial loss brings very real pain. They also pause to check themselves and do any needed research before taking action.

Fourth, Investor Mind: By far the most effective strategy for an investor to manage their emotions is by developing an investor mind. Beginning with knowledge and training their brain, investors can learn to manage emotions. By training your investor brain you add your subconscious as a powerful investment tool. With both the subconscious mind and emotions, a trained investor brain can develop into an excellent investment ally.

Considerable misinformation about investing and stock markets has parked in poorly informed minds. That accounts for the decision of many people who decide not to invest. For some there are shades of fear or uncertainty based on their misconceptions or the misinformed opinions of their influencers. Understandably, such misinformed people have little interest in investing or trying to learn about investing. 

As always, investing knowledge makes all the difference. It can take some effort to find a good, quality financial advisor suitable for a new investor. But it need not be a costly or especially difficult task. Investors can learn from White Top Investor or many other sites and numerous books filled with high quality information about investing.

Investing can be learned step by step at your pace

Too many people think markets are high-risk complicated places that can’t be trusted and exist to take money from small investors but do work for people with lots of money. Such muddled thinking and other financial and market misinformation are issues that show poor financial education. 

Few educators have shown interest in teaching financial literacy or anything significant about stock markets and investing. The issue gets lip service support from the financial services industry but very limited real action or commitment. Securities regulators offer superficial support to financial literacy but no realistic level of engagement to change anything.

Bias, preconceptions, prejudice and misinformation

In a financial literacy vacuum the blizzard of market and investment misinformation soon fills any void. Combining that misinformation with the bias, preconceptions and prejudice in the uninformed mind makes any investment decision. Fanciful notions or simple lies put more bad information into a dangerous mix. Using any such thinking for financial or investment decisions can bring on investment disasters that quickly destroy portfolios. 

The only cures are facts, research and knowledge.  

Knowledge will always be your best investment. It is an investment in yourself. Begin by investing in yourself to build your knowledge and understanding of investing and the market. Train your brain to be an investor brain and supply it with the knowledge to grow into a superior investor. Then apply your acquired knowledge to begin building wealth.

“If you cannot control your emotions, you cannot control your money.”
Warren Buffett

Brain training manages thoughts, emotions and behavior

Issues related to psychology pose the greatest risk to stock market success. The good news is that you can understand and control those risks as you learn about your stock market self. Managing this issue turns aside this risk and adds strength to your stock market success.

Successful investors have a wide field of market vision and understand market behavior. Managing psychological risks lets them see ways forward as opportunities others miss. The results show up as better results in their portfolio performance. Because, even without all the answers, investors understanding psychological issues of investing, have advantages.

Controlling your brain training customizes your mind and thinking

Building an investor mind, teaches stock market success essential thinking, feeling and actions.

Questions and answers can help train and build your investing brain. The answers can be different but right for different people. Building your investor brain is a very personal process, unique to you. That process can be different for each person.

Consider each issue and how it touches you, your thoughts, feelings and actions. That helps build your responses and understanding of stock market activity. As your experience grows, your responses evolve. That trains your mind. These may seem minor but are important contributions to your stock market success.

In effect, you develop your unique feedback loop. Each experience contributes to your change and growth and influences your mind. It does take time but shows up as positive portfolio performance. Investors get very well paid for making the effort.

Ego, character, psyche, our very core– the challenge   ­­

Ego sits at the very top of the list of psychological risks. Portfolio destroying risks affect both men and women. However, men do suffer from this affliction more. All investors need this awareness. Knowing investors have an advantage and the opportunity to control any such flaw.

Driven by the why of life and investing

When investing, it is important to keep on plan. At times people driven to show off, impress or needing approval can invest for the wrong reasons. Any such challenge is between you and your mirror. Knowing the answer is important to the success of your stock market self.

The best investment results come to those who do not need an audience or outside applause. Don't invest to seek the approval of anyone. Invest for your own financial growth. Living well in secure control of your time is the best reward. 

Ego on display or performance driven by plan goals?

“Look at me!” is not an investing strategy or part of any successful investing plan.

Investors seem to display pride or humility. The pride driven have image, appearance and need for approval issues. More often traders than investors, this, "look at me loud" crowd has show driven behavior. That can bring dangerous changes to investing behavior.

To avoid such risks, acknowledge the issue, if it affects you. Such pride can cost you big time portfolio damage! But, with awareness, controlling it is possible.

On the other hand, humble investors able to pass on ego issues, can control any such notions. That produces a consistent record of better performance. Humble investors, basing decisions on knowledge and research, enjoy a steady profit stream.

In this context, humble does not mean quiet, introverted or withdrawn. It means they have confidence in themselves with no need for approval from others.

We gotta be but we need to be accountable and focused

Most people balance between ego and humility seeking both satisfaction and performance. That works and keeps any ego in check for both stock market success and in life.

Investing for any reason other than making money puts your money and future at risk. Find something else to do rather than investing. Put your money with a trusted advisor and leave the market alone. Both your money and financial future will be better off.

Psyche check and logic reconciliation 

Every investor quickly learns that markets and other investors do not follow logic. That fact of stock market life challenges some people who find it hard to accept. Stock market behavior can be an irrational display without any decision logic.

Markets do not follow cold logic. But, any erratic or illogical behavior can open the way to either danger or opportunity. Alert, informed and experienced investors can take advantage when such events present themselves.

Ego management and related stock market behavior, challenge more men than women. Ego, next to fear, produces the most poor stock market decisions. Successful investors can manage both.

While not logical, markets do display the collective behavior of human decisions. It is certain that we are capable of doing some bizarre things. But successful investors never make decisions thinking they are smarter than the market.

Careful! Blind determination or faith can make you broke! Always pay attention when the stock market disagrees.

The driving need to control can be ego on display. Is control essential to you or do you need to be the center of attention. If so, be the life of the party but do not manage your own investments. A financial professional will deliver a far better future to such people.

Understanding risk control and taking the long-term view

In general investors are content to ride on a steady and growing stream of income. But traders are often in a bigger hurry and more often suffer from poor ego driven decisions. The difference shows up on the trading record. Frequent trading can send a warning!

Should you experience a series of poor trades, STOP! It is time to step away and question your decision making and investing process. Check for a puffy inflamed ego!

When trouble visits as errors of losses, successful investors investigate and analyze. That can find the issue and teach the lesson needed to get back on track. Surplus ego can put aside a process of assessing opportunity and risk. They know taking time to think gets better returns and paid by higher portfolio returns.

Managing ego and emotions lets you guard against ego driven mistakes. That puts control of your portfolio and financial future in your hands.

Lesson Takeaway:  
How superior investors manage emotions

Now, it’s your turn to apply the lesson:
How superior investors manage emotions

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!

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