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Roword Roword

The Market’s Fear and Greed

 


Two emotions that have a greater impact on human achievement or failure than any other feeling we can feel. Fear and greed both refer to an underlying emotional condition. Hundreds of millions of dollars have been made and lost only on the basis of these two feelings. Trading, commerce, and relationships are all examples of this. Why, therefore, do so many educational courses, stock trading books, and online courses completely avoid this subject?


 


Perhaps they aren’t ignoring the subject of emotions; perhaps by teaching their readers certain methodologies and skill sets, they are confronting the emotional side of trading full on!


 


Emotions are well known for causing a certain level of pleasure or discomfort. Emotions are linked to mood, state of mind, wants, and passions, according to research. The list could go on… So, as individuals, how do we create a skill set to navigate these emotions in business, trade, and life?


 


If our emotions have been evolving for over 2 million years, Charles Darwin was right to suggest that they serve a role for humans. Shouldn’t we be utilizing these incredible abilities rather than blaming them for poor decision-making? Poor decision-making, in my opinion, has little to do with emotions and everything to do with laziness and lack of preparation.


 


A Word From One of History’s Greats!


 


I’d be doing my readers a disservice if I didn’t highlight Warren Buffett’s investment philosophy. One of our generation’s most successful investors. Warren Buffet kept to his plan and made a lot of money. Warren Buffett demonstrated how critical and rewarding it is to stick to a strategy. Buffett and his partners follow a few simple principles when selecting whether or not to invest in a firm, one of which is to try to determine the company’s longevity.


When the market is overrun by greed, the same thing can happen with fear. When stocks lose a lot of money over a long period of time, the market as a whole can grow frightened of losing even more money. Being overly afraid, on the other hand, might be disastrous. It is at this point that successful investors and traders make their moves. This is where the big bucks are made.


 


Investors swiftly switch from one “safe” investment to another, just like greed drove the recent Cryptocurrency boom or fear dominated stories about potential trade war outcomes. It turns into a never-ending game of cat and mouse.


 


This influx of cash into the stock market demonstrates a complete disdain for many technical signs that continue to warn of an impending correction. The rush of headlines that read “ALL TIME HIGH” appears to have elated retail investors. Should the fear of a catastrophic market correction paralyze regular investors? Granted, losing a significant percentage of your retirement portfolio’s value is a difficult pill to chew, but the prospect of missing out on the tremendous returns the market is currently promising investors of all skill levels is even more difficult to stomach.


Having a clear grasp of my own personal objectives, success, and developing a list of my OWN desires and needs, rather than attempting to fulfill the ambitions of others, has been a huge element in putting out the greed flame in my trading and daily decision-making.


I’ve also included a list of “Must Read” books that have helped me in my quest to control my emotions when making decisions. I’ll keep this updated as needed.



One way that has shown to be beneficial to me is being cautious about how I assess success, riches, ambitions, and, most importantly, happiness. Allowing outside factors to influence our happiness and success is far too easy these days. Every day, social media bombards us with the success of others.


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Roword

2016