In recent months, many investors have faced major emotional dilemmas. But be careful, you cannot trust your instincts if you want to be sure of high returns in the future.
Shareholders who have lost success in recent weeks, and it is difficult for the property
But even more difficult is it for your emotional life, it has absolutely good and thorough in you.
Questions like “Do I have to sell everything?”, “Should I buy now?”, “Is bonding achieved?”, Blights have all serious investors.
The problem is you can’t trust your feelings. The only way out of the bad returns does not belong to emotions but to thinking super rational.
Here are four ways your brain can destroy good returns on your investment:
1. Don’t panic
The brain instinctively responds to the danger of escape. Do not panic. Keep in mind that the risk of investing in stocks was actually higher as they peaked than they have now dropped significantly. We want to buy at the bottom and sell at the top.
The problem is we don’t see the corners. Therefore, there is only one way out. Know yourself, your risk and your investment. If you have the right strategy and nothing has changed, then you should just make adjustments to your portfolio and not jump on the sudden whim and sell or buy a new way.
2. Never give up
You tend to underestimate the risk of not being invested in stocks. And yes – it’s hard when the C20 index drops 10 percent in one day and you see the money disappear in the air, but you can’t hours with your purchase properly, so if you jump out and you lose the day the C20 index rises 10 percent.
Invest in the fundamentals of the economy. Four years ago, Growth shares became the right place to invest. Today, you need to invest in defensive stocks and into value stocks. It is now important to minimize the downside risk but catching some rockets rank among countless, miserable stocks. Be sure to always spread your investments on at least 10 different stocks from different sectors and bonds.
3. Experienced risk is more difficult than you thought
You have probably been asked by your advisor: Can you tolerate that the shares fall 20 percent. You answered happily, yes, because you knew it would also result in a 20 percent gain. But it is far more painful for your brain to accept a 20 percent loss than it is to accept a 20 percent gain. The loss was an accident, while the gain was skill! You experience risk asymmetrically, and this is your brain arranged, you can do nothing about it.
Example: You consider with a high probability that the stock market today is far riskier than a year ago. The fact is that the rate of 50 percent this year actually means that the risk is smaller and the potential for greater than in November 2007. The problem is that you have so many bitches that you are allergic to risk. It is now much more likely that the stock market will fall below 50 percent next year than more. Therefore, the risk is now lower than a year ago.