Control 10 Paralyzing Mental Blocks of Investors
Knowing how to control 10 paralyzing mental blocks of investing success opens the door to investing success. By controlling mental blocks to making money, knowledgeable investors give themselves a huge advantage. That advantage empowers you to control your investing future, build financial security and retirement independence.
This is Part 3 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.
10 Paralyzing Mental Blocks
Running with the herd
These mental blocks can work together and be your biggest enemy to investing success. This is a psychological conflict and you are the problem! The very good news is there are ready solutions available. You can deal with each issue and make the changed that give you absolute control of your financial future.
Academic fields called behavioral finance or behavioral economics study such issues. Here we are not concerned with academic precision. Rather we need problem identification and practical solutions.
We want to do more than just cope. We want to control our response to the market situation that triggered the issue. That will let us turn the situation into an opportunity for profit. To do so we need to have a way to control these most common mental blocks. Today we discuss each mental block and how to take control with our response.
Fear can make it awfully tough to buy low, sell high. Watching money shrink as investments fall can bring up apocalyptic feelings. We can rationalise the intrinsic value of the company and hope that will save the day. We can say the market is wrong. We can claim that without evidence of a fundamental problem in the company, the market overreacted.
However there is only one value that matters. The market value. That is what someone is willing to pay and thus what the stock is worth.
Set mental stops. When a stock falls to that level, sell to keep your capital. Always remember, we must follow the key rule 1, Warren Buffett tells us, “Don’t lose money”! Never forget or ignore rule one.
The opposite of fear comes into play when the rising value of a stock we own seems to grow forever. We start to think as if trees can grow to the sky. Nothing will change or go wrong.
Take and enjoy the ride of rising prices. When the price trend reverses to turn in the wrong direction, get off that bus! Sell, collect the profit, feel good and move on.
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Have a prosperous day!
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