Saturday, July 31, 2010

Investment Psychology: Unload the Burden of the Past

Yesterday, I talked about 2 common mistakes novice investors make with Bottom Fishing.  Today, let's discuss another aspect of investment psychology.

Some investors tend to be constantly haunted by their past failures.  He/she may have lost a substantial sum in the last recession, the last market crash, the last market correction; or he/she may have lost the 'golden opportunity' to make millions of dollars.

These past burdens loaded on their shoulders as well as their mind.  When the crashing down market has turned, they are simply frozen by their past burdens and fail to act sensibly.  They are still licking their wounds while letting once in a decade opportunity pass. 

It is essential for any investor to realise the fact that he/she cannot be 100% right.  Nobody can!  Past losses, missed opportunities are all in the past.  No matter how sad, how remorseful you are, you can't turn back the clock and correct those mistakes.  Such past lessons should serve as your personal case studies, for you to analyse why the mistakes were made, what had gone wrong in your decision-making process.  They should be stepping stones to future successes, instead of being burdens that drag your feet. 

Happy investing!

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