JUST SHARING - Why Investing Probably Won't Help You Get Chicks, We help you to set realistic goals and accompany you through the journey to your destination. We have a lot of different topic, I hope this article about Why Investing Probably Won't Help You Get Chicks will be helpful.
The Investing Process Isn't Hot, Sexy, or Terribly Interesting
If you’re into investing because you think it’s going to get you girls, I’m afraid you’re sorely mistaken.
And although some reputable magazines/news sources do purport that a high level of financial savvy is a good indicator of the potential success of a relationship, I’m here to tell you that the actual process of managing money is not sexy, hot, or terribly exciting.
It’s the results that matter. Maybe that’s what the women are attracted to.
You see, in order to be successful in a physical relationship with someone, you need to have a degree of emotional attachment to the situation. You need to be in touch with your feelings and have to worry about the other person’s emotions and needs.You need to treat your loved one like a person, not like an object.
In an emotional relationship, you often stay up late at night, thinking about the other person. Sometimes you lose sleep over disagreements, worries, or disappointments.
In a physical relationship, you should give your loved one a chance, not cast them off at the sight of trouble.
This is the exact opposite of how investing should be.
You see, as an investor, you need to have no emotions. You need to be a machine!
You need to completely detach all emotion from an investment. To be successful, you need to set a plan of attack, and execute it with extreme prejudice. You can’t afford to hold onto an investment and “give it one more chance” if things aren’t working out as you had originally planned.
You need to get out of it immediately. Break up. Drop anchor. Swim to shore, and move on.
Sometimes though, investors act like they’re in a relationship with their investments.
They get into trades or investments that keep them up at night.
I’ve been there. I’ve done some trades in my life that made me toss and turn for hours on end, where I’ve worried and obsessed about whether the money I put to work the day before was going to evaporate before my eyes in my trading account when the markets opened the next day. Fear and emotion had taken over my mind and begun dominating my thoughts and actions.
Never let this happen to you. No investment should be like this. It’s pure torture.
Science, Fear, and Investing
Scientific studies show that fear, more than any other human emotion, tends to guide or alter the decision-making process for the average person. One particular fear—the fear of missing out (“FOMO”)—dominates our minds in a social context…that's one of the reasons why so many of us are glued to Facebook everyday.
Fear of having nothing and being on the streets dominates our decisions to get up and go to work each day.
And like it or not, fear of losing money dominates the investment decisions we all make. To reinforce this idea, the studies show that once this fear is experienced, it is implanted more firmly in our memory than other successes we’ve had in the past.
More importantly, though, fear takes an especially firm hold in our minds during crisis situations. When the world is going to hell in a handbasket around us, we end up like a deer in the headlights of an oncoming semi truck. The fear of making the wrong decision and becoming worse off when things are bad causes us to pause, and to make different decisions than we otherwise would if our heads were level.
You can't let emotions drive your investments, like you would a relationship.
Let’s bring this full circle to investments, and pretend you're reliving the story of a guy I know.
Say you bought Apple (APPL) stock a few months back. You bought just before Apple held a press conference and announced its newest life-changing gadget, and the market went crazy over it. You’re sitting on a 25% gain now, not too shabby. You’re a stock market genius.
Your original plan was to sell at a 20% gain and lock in some profits, or conversely, to sell if the stock loses 10% of its value, in order to protect against downside. But now that things are rosy, you’re willing to hold on for the ride. Things are going well.
But then it turns out that after launch, the Apple iGadget is a flop. All kinds of software and hardware issues, and unforeseen costs for the company. The market thinks Apple has lost its edge. The stock price tanks.
But you hold on, because you believe in Apple, and you want things to “work out.” It’s been a couple months, and you are break even now. But things get worse. Perhaps Apple has paid off some of its suppliers in China to bury toxic waste from its manufacturing operations. Or it has bribed government officials to keep quiet. Numerous scandals emerge, and the stock price tanks even further.
But you still hold on. After all... you LOVE Apple. And your love affair with the stock was doing so well just a short time ago. And the price might come back, right? Things might get better?
But you’re terrified. You’re down 20% from your original purchase price. You start to lose sleep at night. You secretly hope and pray that things get better soon. You don’t brag to your friends anymore that you own Apple. You don’t tell your husband or wife about your brokerage account balance.
You’ve lost all hope of even breaking even. Your emotions are running rampant. They are controlling your trading account now, not you or your head.
I know these are the feelings you have, because it has happened to me. Not with Apple, but with another stock.
You Must Be an Investing “Machine”
Similarly, smart investors base their decisions on facts, numbers, and hard evidence of likelihood for success. They don't make decisions based on feelings, hunches, or assumptions.
And as investors, we literally can't afford to let emotions run rampant in our portfolios.
The smart investor has a plan for each of his investments. Everything he buys should be accompanied by an entry and exit plan, whether that be on the upside or the downside. And he must execute this strategy like a machine—emotionless, cold, fierce, and swift. If the conditions are met on an investment which dictate an action needs to be taken, the “execute” button gets pushed.
It’s the hard thing to do, but it’s the right thing. I can tell you, again, from experience—it actually feels good to know that even though you might be losing money, you’ve done the right thing by sticking to the plan.
I have a friend whose policy is to never take a loss. The thing is, that’s the desired outcome for an investment. It’s not a strategy. He has absolutely no such thing as a plan or a trailing stop. He’s still sitting on investments that have lost 95% of their value from a decade ago.
But why do you have to stick to a plan? How much does it hurt to deviate from it? A better question is, what does it take to come back from a catastrophic loss? The chart illustrates how much a stock price has to rise in value in order to break even once a given loss level has been reached.
If you let an investment get away from you, it has to make astronomical gains just to break even.
There will come a time when your investments will make you scared—and it will likely be due to not following your own plan you’ve crafted to not lose money, which is always Rule Number One, which is : “Don’t Lose Money.” And Rule Number Two, which is: "Don't Forget Rule Number One."
Dedicate yourself to follow this rule before it comes down to the wire.
Live long and invest,
Jeremiah
Thanks for visiting my blog in title Why Investing Probably Won't Help You Get Chicks, Please Like And Share With Your Friends