Remon Talks

When people start to get greedy they often start to fail as well. Let’s take investing for example. Say you have a portfolio of 5 different mutual funds and one is rising like a maniac. As you probably know you should never take investing decisions based on emotions. Greed is such an emotion and more then once people start buying more shares of the rising fund, or even worse, sell shares of the other 4 funds and then buy more shares of the rising fund.

While this may not always result in failure, the overal return on investment is almost always less then if you sticked to your investment strategy and didn’t buy additional shares or switched funds. Greed is also one of the top reasons why starting day traders fail, say they buy 1000 stocks at $20 each, the day trader wants to sell at +2% ($20,40) making him a gross profit of $400 for that one trade. When the stock start to rise and reaches $20,40, the emotions come into play and very often they hang on to their stocks to sell them for more then they planned.

You guessed it, the stock rises, $20,40, $20,42, $20,43, $20,43, $20,43 BOOM $18! Say bye bye profit and hello to loss! Although the above is hypothetical always remember to not take actions based on emotions when it comes to investing, actually, change that to never take financial, business or investing decisions based on emotions.

I’m not saying failing is bad, not at all! Failing is good! I’m just trying to help you guys (and girls ofcourse) increase your success rate.

Trackback URI | Comments RSS