emotions and investing

Discussion in 'Stock picks and trading strategies' started by deepinwonder, Oct 14, 2005.

  1. deepinwonder

    deepinwonder Active Member

    This subject has been brought up here a couple of times and I thought it was an interesting one to discuss. How do or don't your emotions play into your investment habits?

    Sometimes I will miss opportunities for short term gains, just because I hate the company or what it does, like SHLD or UNH. Other times, my emotions lead me into good things or out of bad things, because I can see an opportunity or notice a red flag before someone who is making all kinds of rationalizations does.
     
  2. optimus25

    optimus25 Active Member

    Market movements are almost always dictated by investor psychology. Following what you feel is part of the game, for some. Loss is such a strong feeling.

    I'll have better perspectives after I read a book I bought regarding investor psychology.
     
  3. Pierre

    Pierre Member

    Hey Deep;
    Go to Google and punch in Ed Seykota. Follow the trading tribes and it's up to you to see how far you want to go.
    It kinda changed my whole outlook on trading. But, it's your portfolio.
    Have a good weekend.

    Market looked good today, all must be right with the world. Jim Beam time.
    Don't forget the homework.
     
  4. deepinwonder

    deepinwonder Active Member

    re:

    Well, I only have two stocks left, at this point.... :p
     
  5. xboilermaker

    xboilermaker Member won weekly contest 2x

  6. ki klempa

    ki klempa Member

    I hear you

    I can relate to the emotion part. I bought eBay back in March, I love EBAY THE AUCTION SITE... I buy/sell anything I can., but the stock stinks real bad... I made a few hundred by selling 1/4 of my shares.. I still hold 100 shares & can't let go because I seen it hit 130.00 before and hope it will again.. who knows...

    I wish the emotion part didn't play a part but we are human afterall.

    Kim
     
  7. BuyOnDips

    BuyOnDips Active Member

    Emotions shouldn't play apart in your investing, but they do. It's very hard for beginning investors to overcome emotions on volitale days. It's hard to buy when everybody is selling. It's hard to sell when everybody is buying. People like to run with the crowds. Maybe our emotions are a good contrarian investing indicator. When we feel sick(seeing all the red on the computer screen) we should be buying instead of panicing. When we feel rich(seeing all the green on the computer screen) we should be selling. You probably should have a plan on when you will buy and sell and stick to it so emotions don't interfere with your investing decisions.

    Just a thought on EBAY. I think www.craigslist.org is really going to hurt Ebay just the way that site has ruined the profits of many newspapers. Craigslist is a great place to sell your stuff for free. No Ebay fees. No Paypal fees. It's a simple free classified ad. I'll probably never sell anything on ebay again. Ebay actually owns 25% of Craigslist, but the site doesn't generate much revenue because the other owners like it that way.
     
  8. deepinwonder

    deepinwonder Active Member

    re:

    When it comes to companies that I believe are poorly managed, a love of their products does not affect my emotions when it comes to buying or holding onto a stock... ebay would be a good example. Thanks, but no thanks.
     
  9. englishman26

    englishman26 Active Member won weekly contest 6x

    I love toyota (TM home-gamers!) as a stock, and my fiance loves the Rav4 I bought her! I'd like to keep both for a good while! But I sold at it's high 2 weeks ago. It's time to buy it back - which I will do mon/tue.

    I've been guilty of not selling on the big green arrows twice this year. And 3 times I picked the tops right. 3-2 up but lost more on the 2 misses than I gained on the 3 scores! Emotion really does get in the way of properly picking bottoms and tops. :oops:
     
  10. helk

    helk Member

    When investing ALL EMOTIONS SHOULD BE LEFT AT THE DOOR! Of course, that is easier said than done. I'm as guilty as anyone else of letting my emotions getting in the way, but I've come a long way over the past 6 years and it's not too much of a problem anymore. I find the best thing to do when my emotions start to get in the way is to step back, look at the big picture, and avoid the news for a few days. It's amazing how persuaded you can become by the media without even realizing it.
     
  11. axb8000

    axb8000 Member

    Emotions are good if they are supported by facts and good reason. I invested in a South African ETF (EZA homegamers) a year ago because I felt that S.A. was not getting enough mention even though it's economy and political stability were really improving. That emotional gamble has made me a good bit of money.

    On the other hand I once ran out and bought LUV because I LUVed the airline's cheap tickets and sat in the house of pain for months as oil continued to surge. I let my eagerness to show support for Southwest Airlines cloud my judgement that the stock was at a 52 week high and the future looked very choppy ahead!
     
  12. Affirmed

    Affirmed Member

    If you want to learn about Mr Market read The Intelligent Investor. Dont let it control you.
     

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