Stock Market Investing Without Emotion


by Scotty R Smith - Date: 2010-07-07 - Word Count: 691 Share This!

Investing in the stock market is so tricky, and an emotionally driven decision to most people, that they start to believe that maybe it's impossible to invest and win. People are inherently programmed to get excited when they get paid money, and also to feel sorry when they have to pay a lot of money for something. They act irrationally and emotionally in many events involving money and also when making other important decisions. The most profound characteristic of emotional traders and investors is their wishful thinking, they always try to rationalize the news and make positive news out of them just because they have already bought a given stock, while investing in the stock market . But that's no how it should be, in fact it has been found that if you attempt to let emotions get in the way, you will never be objective!

You must make all decisions about investing in the stock market beforehand:
If you already have bought a stock, and then go to look at the market charts, even though there will both bullish and bearish indicators on them, your mind will immediately allow for wishful thinking. Trying to convince you that somehow the bullish indicators are more powerful and the stock should go higher. Well that's what you expect from your investment, but your analysis on the charts was not objective!

How to tell if you are ready to do investing in the stock market:
One simple way to figure out how objective you really are, is to look at the products you buy, did you buy them on the spot, in an impulse purchase? Or did you buy them after you looked at many different products? Impulse buying decisions, and irrational consumer behaviour is the reason why TV commercials work! Did you buy your latest laptop or cellphone because you liked the way the shop looked, and felt the need to talk to the sales assistant, or you bought exactly what you had plan to buy according to your needs? Most people are socially conditioned to follow the fashion, follow the crowd and make all sorts of irrational decisions just to look compatible in the eyes of the others.

Buy super automobile fuel - it's the fashion!
Let me show you one kind of TV commercial that really works well, that of high octane rating fuels. Most people are under the illusion that high octane rating gasoline (Or super) contains more energy than ordinary gasoline. That is what TV commercials imply and that's what naïve consumers have understood from these commercials. The fact is that octane rating is nothing else but a measure of the fuel's explosion resistance when compressed - it has nothing to do with energy content! And if you believe the lies of BP and Exxon Mobil commercials, then you are a victim of this advertising hype. 99% of cars have low compression engines where no premature explosion can occur and it makes no difference which fuel type you use. But these companies don't spend millions in advertising to remind that 1% of car owners they need to buy Super fuel, they do it to rip off the rest 99%. They need you to waste extra dollars at every tank fill up for the rest of your life, and you are obliged to believe that you get higher mileage because everyone else believes so.

Investing in the stock market should not be based on public poll opinions
TV shows so much meaningless reports on the economy and the stock market, they are based on public opinion polls and useless, nonsense opinions of journalists. I mean how on earth can you follow TV news, let it influence you and then make stock investment decisions based on them? In order to make investing in the stock market impartial and objective, investors should completely ignore the news when making their decisions, and only work with fundamental and technical data. If you follow TV news, you may sometimes win as the millions of naïve investors can push the markets higher, it's not impossible, but chances are you will have invested in a bubble stock that would be about to burst at any time.

Related Tags: stock market investing, invest in stock market, stock market investing guide

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