Psychology of investing

While researching for yesterday’s post, I found an excellent link to the book pictured below.

Unfortunately, IFO can’t scrape the screen, so will have to summarize some of the content. She advises interested readers to follow the link on that previous post. It has many pages from the book covering psychological processes concerning “getting even.”

In this case, they seem to mean to get back to the dollar amount you invested, rather than the meaner version, which can involve dirty tricks or nasty pranks. The authors mean that by being troubled  by the need to “get even” you stay invested in the stock as it goes down while you stubbornly wait for it to go back up. It’s easy to see this error in SOMEONE ELSE’S behavior, harder to see it in ourselves.

Here is another link to this book: “The Psychology of Smart Investing:Meeting the 6 Mental Challenges” by Ira Epstein, David Garfield

Hundreds of essays and books have been written over the years on the thought processes that contribute to successes and failures in investing. We want to zero into the next step, after you have identified what it is that you do that helps you make good selections and trading decisions, as well as bad ones

At some point you may, like most investors, find yourself not doing or doing things which you knew were not going to have good financial results. Things like  trading without thinking a move through. Or not getting to know your CEO.

Now, it’s time to delve into your subconscious with the specific intention or removing the offending tendency. You must be very clear and honest with yourself about why you do this. Then, you change the tendency using one or more tools listed below.

To fix an idea in your subconscious, you need:

1. Repetition

2. Identification with a group

3. Hypnosis

4. Strong emotion

5. Authority figure

It’s late. I’ll return to this subject tomorrow.


About InvestingforOne

I've been investing in various assets by myself using a discount broker for many years. Over that time, I've developed some theories that others might find useful. Plus, there is more to investing than money. Time, talent, work, friends, family all go into developing a good and satisfactory strategy.
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