Wednesday, March 6, 2013

Pain and Pleasure in Trading

This Is Your Brain on Stocks article is interesting.

It is not easy being an investor. The value of your portfolio can go through big gyrations which really has nothing to do with the profitability of your investments or the soundness of your portfolio. The markets are more affected by how investors feel on any particular day. There is also a herd mentality going on. This seems to be especially prevalent amount mutual funds managers.

It certainly seems that some people can get very irrational about the stock market. Some people seem to be more sensitive to fear and greed when dealing with the stock market. There have been lots of studies that show we hate lowing more than we love winning. It is called loss aversion and Wikipedia has an article on this subject. It is all quite interesting.

I must admit, that when the markets go crazy, I just stop looking at them and at my portfolio. The other thing is that we will probably get one more serious market bear before we get out of the current secular bear market we are in.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.

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