Winning or Paralyzed by Attitude?
The attached stubborn and helpless investor is one paralyzed by attitude and not capable of managing their investments well. This post discusses the challenges of attachment, stubbornness and helplessness that can mentally block an investor from good decision-making. This continues our discussion of the 10 Paralyzing Mental Blocks of Investors introduced in the last post. It is Part 4 of the White Top View Series, Mind Game discussing emotions and psychological aspects of investing. Links to all six parts of the White Top View Series, Mind Game are at the end of this post.
The Attached, Stubborn and Helpless Investor
3. Attachment: Falling in love with a stock because we ‘know’ it is good or great and has always treated us well in the past is dangerous. Especially to both our wealth and liquidity.
Solution: Think of each investment as being hired to do a job. Keep them working for you as long as they are doing their job. When they slack off or worse, they begin to steal your money, let them go. Going up is good. Going down is bad. If an investment is going down sell and move on. Get out of the taxi when it stops heading to your destination.
4. Stubborn: When a stock we picked does not do what we want; you can begin to play mental games. You can get into a mindset that rationalizes being invested in the stock because you ‘know’ it is good. When the market is telling you otherwise your investment is not doing the job you hired it to do.
Solution: When the evidence says we picked the wrong stock, sell. Admitting we made a mistake and accepting that the market is right is tough.
We own the decision to buy. But by being stubborn and holding on to a bad investment can eat savings and chew a huge hole in our bank account. Sell and move on to make money elsewhere.
5. Helpless: The high volume of noise from the business channels and the frantic breathless reporting from trading offices can make an impressive racket. Fever pitch commentary and urgent predictions of doom can stun an investor.
Most often you are witnessing media manufactured news and issues. Many of the experts are people talking their book. That means they present and rationalize the positions they have. They are not presenting balanced reports. Expressing opinions as facts misleads viewers. Often the commentary slant or spin has their specific point of view. They are “talking their book” or pushing the investments they hold. They hope you will also buy shares in the same company and thus support their investment.
Such interviews often are more promotions than balanced information. When you see and hear of all these informed, smart people acting with conviction. It makes you feel you must do something – now – but what?
That media din builds audiences of eyeballs frozen to the screen. That is the purpose. All the more to watch advertising. That pays the bill for broadcasters. From their point of view that is success, and all good.
Solution: That media din can do little for you until you know the game. Most of the time doing nothing is the right thing to do. Remember, if you are investing you are in for the long haul.
Listening to short-term traders can completely confuse and mislead you. Don’t be the attached, stubborn and helpless investor. If you are in for the long haul and objectively not much is really happening, do nothing. If your mental stop has been hit, sell. End of issue.
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These discussions and information intend to help you better understand markets and investing. I am not a financial or investment advisor; opinions are for informational and educational purposes only and are not intended as investment advice. For syndication of the site or blog, please contact info@WhiteTopInvestor.com.
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Links to the White Top View Series, Mind Game