13 Aug 09 Quiet The Emotional Demons Before You Invest In The Stock Market

We have all been victims of other people’s stock advice. “This stock is guaranteed to go up!” Sometimes the advice comes from a neighbor, or a close friend. It may even come from your own investment advisor.

Human nature gets us thinking. You don’t want to lose out on the potential gains. Without batting a rational eye, you invest. Most of the time the end result is much worse than you expected. However, you continue on and repeat this cycle over and over again.

What is wrong with our thinking? The answer, for most of us, is that our emotions take control of our decisions. They are so powerful that we often ignore our rational, logical thoughts. The opportunity for a quick dollar or hope to “get rich quick” heightens our emotional thinking. You must realize that it is not the rational side of our brain that is tripping us up, but the emotional side!

We tend to ignore many sound investment plans due to emotions. You can, however, quiet that emotional side that forces you to ignore your well thought out investment strategy if you work at it. You can learn to stick to your investment plan through both good and bad times.

Casual investors make the same mistakes over and over again because they cannot shake the demons that compel them. It is this type of trader that cannot overcome emotions while investing. They usually lack the ability to treat investing like a business and instead treat it like a game of poker.

The main driving emotion for many investors is the fear of losing money. The next is making a quick buck. Lets not forget to mention greed, the king of all emotions. All of these cloud judgment and prevent you from thinking clearly about how an action affects your portfolio. It doesn’t take long for disaster to strike when this kind of thinking is in play.

When investing, I had a difficult time getting my emotions under control. I was finally able to control my emotions and let my logical side control my investment decisions. To help me do this, I developed an investment system that I use over and over with consistent success. I have certain parameters that I follow to guide me towards the right kinds of investments. This system is black and white, very logical. Now I remain focused and stick to my strategy even when that emotional beast tries to rear its head.

There is no shame in making poor investment decisions over and over. The good news is that you can change things starting right now! I made that change and as a result I have been more successful than I ever have been investing in the stock market. I also managed to do this while the stock market was in a free-fall! I promise you, to be a successful investor all you need is a solid investment strategy and the ability to keep your emotions checked at the door. Please, take the advice of someone that did that very thing!

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