Hope
Hope is generally a good emotion to have, but it can be very dangerous and
imprudent when it comes to investing.
Viewing your long-term investments through the rose-colored glasses of hope can cause you to embrace a futile non-strategy that will fail miserably.
Viewing your long-term investments through the rose-colored glasses of hope can cause you to embrace a futile non-strategy that will fail miserably.
Embracing hope in your general approach to
long-term investments is an outright denial of reality.
Raw price data and current trends relative to your
cost-basis and strategic objectives are the only variables that you should consider
if you wish to effectively manage your long-term investments.
The personal responsibilities associated with
strategic management protocols are easy to dismiss when you rely on hope. This emotion can cause you to make the
dangerously false assumption that everything will turn out all right in the end. The speed with which many investors embrace
hope is a testament to its deceptive and seductive allure.
Hope is an extremely dangerous and highly
speculative strategy for investing your life savings over the long haul. You must constantly remind yourself that
numbers and trends don't lie to ensure you don’t buy and hold an investment in
the hopes that it will become a long-term success at some point in the future.
It's time to reassess your options and take
appropriate action when the original long-term trend supporting your investment
decisions changes. This strategy is a
far better alternative than simply hoping that things will eventually improve. Hope is a type of denial that you should
avoid like the plague.
Fear
Many analysts
believe fear is the strongest of the three emotions that influence investors. Extreme levels of fear spawn panic, which
rarely produces a desirable outcome. Fear
of missing the extraordinary profits everyone else seems to be making in a bull
market often triggers a sense of panic to join the party when it is imprudent
to do so without explicit strategic contingencies.
Fear can also
paralyze you into remaining with a losing position for longer than you should. Allowing this emotion to control your
investment strategy will destroy you. Extreme
fear will fill you with an intense desire to eliminate this emotion, which can
compel you to exit your investment at the worst possible time. Selling out too early or too late due to
fear can cause you to suffer unnecessary losses.
Greed
Greed is an emotion that
is inherent to the human condition, probably because of the survival-based
hoarding tendencies of our nomadic ancestors.
Greed in the modern world is largely irrational, especially when it
comes to managing long-term investments.
The ridiculous
expectation of buying in at the very bottom of a price trend or selling out at
the very top of the trend is a common example of irrational greed in the modern
sense. Long-term investors often cling
to this expectation even when they record respectable profits.
These unenlightened
investors somehow feel cheated if they fail to exit their positions with a
maximum profit. The problem with this thinking
is that it requires the investor to guess the time and price at the very peak
of open-trade equity during the course of an ongoing long-term investment
campaign. Such expectations are simply foolish.
Striving greedily to
achieve such impossible tasks will ruin an otherwise productive strategy and
wreak havoc on the performance of your long-term investments. Submitting to greed and deviating from a
prudent investment strategy is another recipe for unmitigated disaster based on
emotion.
You cannot manage your investments without the
combination of a sound strategy and emotional discipline. Sound strategy and emotion discipline
engender rational behavior. Rational behavior empowers you to earn money investing
over the long haul.
Click here for graphics that will assist you in answering critical
questions to help you determine the suitability of a simple, effective
solution for achieving your long-term investment goals.
|
The response I
most often get when discussing some of the intractable challenges that will inevitably
challenge and disrupt global and national economies is one of clear denial. People often reply that life won't be worth
living if things ever get that bad. They
also say that everyone will be in the same boat anyway, so why should they plan
for any contingencies to cope with these plausible challenges.
I understand the nature
of such denials, but I don't understand why it's so hard for most investors to
take simple measures that would benefit them regardless of future economic outcomes.
Assume for the
moment that we knew with absolute certainty the world was going to end in 55
months. What would most of us do? We would probably quit our jobs, focus on our
family and friends, spend every penny we had and max out every credit card in
our possession, if we didn’t panic and immediately begin killing one another. We would also race to fill our bucket lists
before that fateful day arrived!
Sadly, this
mindset also describes how politicians view their political careers. It also explains why they tend to spend and
redistribute taxpayers' money like there’s no tomorrow.
Let's be
realistic; the world will end only once, and not for hundreds of thousands of
years. You'll probably be spending a lot
of time on Earth before you die. Your responsibilities in your investment
strategy require you to strike an appropriate balance between spending and
saving. The effective self-management
of your life savings is one of the most important of these responsibilities.
Hope, fear and greed not only cause long-term
investors to over-react to short-term events, they cause denial and wild
speculation. These emotions often create
dogmas that convince naïve investors to adopt an unshakable faith in a
preordained future with religious fervor.
These investors believe that the future will bring whatever they want
most, rather than what is actually happening according to current prices and
trends.
In every great bull market, the music
eventually stops, a chair pulled, and many long-term investors are hurt in the resulting
panic.
A
Strategy for Every Season
The Guardian
Revere Long-Term Trend Monitor uses a long-term investment strategy
to break the destructive cycles of hope, fear and greed. This service supplies action alerts that
provide you with advance notice and a clear heads-up reminder of your personal
responsibility in exercising strategic protocols appropriately. These tools will help serve your best
interests in growing and preserving your life savings over the long haul.
Click here for graphics that will assist you in answering critical
questions to help you determine the suitability of this simple, effective
solution for achieving your long-term investment goals.
|
Read More ->>
