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Irrational behavior in normal markets
Irrational behavior in normal markets or how emotions and psychology play a role in stock markets that can be used to help or hurt your investment value. Irrational behavior in normal markets can puzzle investors, especially investing novices. In fact, irrational behavior and normal markets are perfectly normal. They are the same thing!
Irrational and Normal
This is lesson 5 of the Market Mind of Superior Investors course that discusses emotions and psychological aspects of investing. Links at the end guide you to related content if you want to learn more.
Most people think of themselves as rational beings. However when it comes to investing you can see much irrational behavior. It seems many of us can get a little nutty. Irrational buying and selling occurs every day in many stocks on the markets around the world.
This is not something to stress over, just be aware of it. You can use it to your advantage. Making both skillful entries into investment positions and timely exits from those positions, can definitely add to your gains.
Think about how we use the TV remote. Especially we guys “watch” multiple programs or games at once.
Amusing ourselves or frustrating someone else, makes us think that they just want the remote! How rational is that?
Drivers can be nutty
Think of driving. In a phenomenon that confuses mathematicians, we all claim above average driving skill! We know we are good drivers. However, you may not so sure about me and I do wonder about you…!?
We don’t have to drive far to see irrational behavior and poor decision-making. It is on every one of our highways and byways. Driver education and experience has us ready for it. By routinely dealing with such irrational behavior, we keep safe. That lets us comfortably and securely arrive when and where we want.
In similar fashion, some stock market behavior can seem irrational and bizarre. Possibly, however, overall the markets work very well. Understanding and accepting this is a positive step.
Irrational R US!
When being honest, most people can admit to irrational investing behavior. Perhaps shockingly, that includes financial industry insiders. Most admit to investing on an impulse. The few that deny, lie. Professional or not, we all screw up and do irrational things.
Understanding and accepting this as fact, helps you become a superior investor.
Knowing how emotions and psychology play out in markets boosts confidence and profitability. That leaves knowledgeable investors holding more money.
Be aware that this normal irrational and emotional behavior, definitely effects and influences the markets. Especially in the short-term. Everyday in the stock markets, we see more evidence.
Knowing has advantages!
Step by step you can learn how to navigate the markets with skill. That lets you become comfortable and able to safely and profitably invest in stock markets. Then, you will be as comfortable in the markets, as you are when driving down the street outside your home.
Know and accept that emotional behavior throughout the market is not just displayed by retail clients. Professional panics are well-known. Such behavior is not considered proper to discuss in polite company!
This bit of heresy often gets a knee jerk rejection from some old hands. They are not all Egyptians, but they do live in the land of denial!
Most detailed stock charts display the daily evidence of emotional play. Know and accept that it is normal human behavior. It is us behaving like us. We can be nuts!
Knowing and using this gives us an advantage. Advice to leave your emotions out of the market is nonsense. It is hokum to think you are going to behave differently in the market than you do elsewhere in your life. And neither do the other people!
Your emotions come with you. They involve every aspect of your life. They are coming to the market with you. Get used to it! Learn how to use them to your advantage. That can give you a significant edge over other players! Then you can invest confidently, profitably and end up holding more money.
Using this knowledge gives you an edge. In future discussions we cover specific knowledge and techniques that can make emotions and market psychology work for you.
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Use White Top Investor lessons to learn investing. Then, grow into a knowledgeable, comfortable and confident investor. In fact, you can learn investing one small step at a time at your own pace. Do that and become the master of your financial security and independence. White top Investor never sells or shares our email list. Learn more.
Market mind of superior investors, lesson links:
Introduction to Market mind of superior investors
Course 125 Lesson 1
Thinking investors grow money Lesson 2
Girls make winning investors Lesson 3
3 Wealth assassins lurk Lesson 4
Irrational behavior in normal markets Lesson 5
Mental blocks paralyze returns Lesson 6
Attached stubborn helpless investor Lesson 7
Optimism and unrealistic investor minds Lesson 8
Muddled minds harm investors Lesson 9
Next lesson 6:
Mental blocks paralyze returns lists 4 ways investors succeed. They get help, learn, assess risk and set goals to get superior investing results!
Have a prosperous investor day!
Bryan
White Top Investor
[email protected] WhiteTopInvestor.com
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© 2013-19 Bryan Kelly
About the Author Bryan Kelly
Bryan Kelly uses White Top Investor to share his extensive investment knowledge and experience. He introduces strategies like the No-Worry Investor and the Index-Plus Layered Strategy, which encourage investor growth through personalized investment plans aligned with their unique circumstances and goals. By helping investors make money work for them and avoid common pitfalls, he aims to support the individual growth of wealth-building investors who can create secure, comfortable financial independence. With decades of experience, Bryan is committed to making stock market success accessible to anyone ready to take control of their financial future. The About page shares the story of his daughter's question that inspired the creation of White Top Investor.
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