• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Investor.org

Life as an Individual Investor

  • Home
  • Stocks
  • Futures
  • Annuities
  • Gold
  • Commodities

Emotional Versus Rational Investing

by GrowthAndIncome

Investment decisions should be well researched. Stock trades should follow careful analysis and trades should be executed with a cool hand and cool head.

Does that describe your investing style? Does it describe mine?

No, probably not for many readers and, unfortunately, not always for me.

So, what to do? How can we all be more rational investors?

Well, maybe we can start by comparing the mentality, mind and actions of emotional investors with those of more rational, controlled and analytical investors.

Here’s a short list of what may describe my “emotional investing moments”:

  • I invested based upon belief, in brand or company, without deeper research of recent and long term fundamentals
  • I acted because I thought or assumed something positive was evolving, without sleeping on the decision to buy or sell and fully considering the basis of the assumption
  • I bought or sold stock when I was tired or under stress
  • I made a decision without reading financial statements
  • I acted based upon news alone
  • I acted based upon “eyeballed momentum”
  • I followed the herd without a clear understanding of the make up of the stock buying herd
  • I acted on perceived versus investigated value of a company
  • I bought because I believed a stock would go up
  • I sold because I feared that a stock would go down

The fundamental or universal quality of almost every stock purchase or sale that I have made, which buying or selling of shares I would describe as emotional acts, was that my actions were based upon little more than a half-reasoned, half-resarched belief often accompanied by a state of heightened excitement or anxiety.

Investing decisions are best made when subjected to a detailed discussion with a well trained and qualified investing adviser or similarly trained professional.


Filed Under: Stock Market

Primary Sidebar

Investor Index

Footer

Privacy Policy
Terms of Use
Copyright Policy
Disclaimer

Jeffrey A. Libert, Esq. © 1998 –2021 / All Rights Reserved
DISCLAIMER - The articles and information on this site are not intended to serve as investment advice. Decisions to invest or withdraw an investment should only be made after thorough and careful research AND consistent with the investor's ability to undertake and manage risk. Significant investing decisions are best made when subjected to a detailed discussion with a well trained and qualified investing adviser or similarly trained professional.

This site uses technology called "cookies". A cookie is a piece of information that a website stores on a visitor’s (your) computer. Unless you provide your personal details - such as your name, email or phone number - we do NOT collect such information via cookies. You or someone acting on your behalf would have to actively upload such personal details via a form, by choice. Cookies may record IP addresses which may help identify the country or region you are visiting from, time of your visit, length of visit, website pages visited or attemped to visit (such as outdated or removed pages), amount of bandwidth consumed by your actions, browser type and other information that is generic, that is, applies to all visitors. The functionality and future editions of this website depends, in part, on cookie / visitor data. This site may also use cookie data with software called "analytic", which helps us to better understand our visitors and offer them a better experience. You can accept or reject our cookie settings.Accept Read More
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled

Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.

Non-necessary

Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.