It’s an easy concept, isn’t it? So simple, anyone can do it. I’m sorry to be the bearer of bad news, but it is neither simple nor easy to do. In the “real world of investing” it is theory vs. reality. I know what you are thinking, if Warren Buffet can do it, so can I. Sadly, no you can’t. And even when utilizing the best proven data sources out there (that can cost tens of thousands of dollars a year, or much more), they are not anywhere close to 100% correct. It can’t happen because it is impossible to gauge human beings investing emotions. It’s as impossible as becoming Steph Curry and dropping 50 points in a Warriors game (sorry, he is my son’s favorite player).
Instead, what you can do is recognize why it may be difficult, if not impossible, for you to do it. It’s because we are just too emotional when left to our own devices as it applies to investing. We try utilizing polarized emotions, at opposite ends of the spectrum, to make our decisions. They are fear and greed. They are the emotions that keep you from having the success you need, to get those investment returns you desire, and to help you live your life the way you want. In my opinion, emotions are the single biggest factor hindering the investment community today.
There are now some data points and gauges that measure fear and greed in the marketplace. They are very accurate measurements on these two emotions in the market, and how investor sentiment may drive equity prices up and down. It is usually major institutions that utilize this data to buy when fear is at its highest (and when many of you are selling), and likewise they will be selling when greed is at its highest (this is where many of you buying).
The point is simply this: Do not use your emotions of fear and greed to make investment decisions. It’s just not a wise way to invest your hard-earned money. It does not bode well for successful investing or for your nervous system. Instead, utilize proven data based on fact that can help you navigate your investment decisions. I am not saying you won’t have FOMO (Fear Of Missing Out), or an anxiety attack before you make these decisions. I am just saying that following “proven data” instead of emotions could help your portfolio from becoming dust in the wind…
Posted February 08, 2023
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