Post by Admin on Sept 24, 2004 14:03:55 GMT -5
Christian said:
The biggest problem investors face today, is a tendency to be controlled by their emotions and not their intellect.The three greatest emotions are
#1) Love
#2) Fear
#3) Greed
We'll talk about the last two because I've already warned you about falling in love with a stock.
Many Professional Traders claim that they no longer make money trading stocks, they now make their money playing off the emotions of amateur investors.
We are our own worst enemy. Let me give you a classic example. I pounded the table on AZMN at .09 but everyone, with the exception of a select few, were filled with "fear" because it had fallen to .09, so something must be wrong with it.
When it rallied to .20, everyone jumped onboard because they didn't want to be left behind - "greed".
The stock retraced to .16 and everybody headed for the exit - "fear".
We all know the old adage "Buy low and sell high". How many times have you done exactly the opposite? Be honest.....
Why?
Greed or Fear or both. Right?
Savant will be writing a column over the weekend about a lady, Anne Scheiber, who turned 5K into 22 million, using only the Wall Street Journal. Anne was such a spend-thrift, she went to the library every day to read the WSJ for free, because she didn't want to waste her investment dollars on a subscription. When you're investing on day old news, greed and fear are less likely to control you. Anne was guided by the fundamentals. I have great respect for technical analysis when it comes to trading, but for investing, you have to see past the chart. Little old Anne, with her free WSJ, had that vision.
We have an incredible arsenal of investment tools at our disposal today.
Unfortunately we often misuse them and shoot ourselves in the foot like Barney Fife. Unlike Barney, we've been given more than one bullet.
Gotta' run, Aunt Bea's calling me to lunch.
Blessings
CT