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2 years ago

How Fear and Greed Can Affect Your Investing


Financial Markets are driven by emotions: Fear and Greed. Master your investing emotions, or they will master you.

Fear is a strong primal and instinctual emotion. Fear has kept our species from getting eaten by saber-tooth tigers and jumping off cliffs trying to fly like a bird.

Greed is also a primal emotion. Greed has forced our species to excel and thrive. It is also the source of conflict when one persons greed overlaps with another’s.​

While we may like to think we have evolved beyond our primal instincts, our emotions are still very primal. The stock and bond markets which are a major source of wealth in the global economy are primarily driven by these two primal emotions: fear and greed.

Investing is scary and at the same time alluring as a potential source of wealth. Whether you are new to investing or a seasoned veteran, you will constantly battle both emotions. You will also have to learn to cope with this psychological impairment if you want to learn to invest better.

​Some of the world’s most successful investors have learned certain tricks to cope with these emotions which would impair an otherwise rational investor. In order to become a successful investor, you will need to understand these two emotions and how to harness them in a productive manner.

Fear tends to be the strongest emotion and also the most elusive. Primarily because investors don’t understand how it applies to their own investing psychology.​ Let me elaborate…

Fear: The 2 fears of investing

The emotion of fear when investing can be broken down into 2 sub-categories: Fear of losing money, and fear of under-performing the market (or more commonly known as, the fear of under-performing your friends).​

Kirk Chisholm is a Wealth Manager and Principal at Innovative Advisory Group. His roles at IAG are co-chair of the Investment Committee and Head of the Traditional Investment Risk Management Group. His background and areas of focus are portfolio management and investment analysis in both the traditional and non-traditional investment markets. He received a BA degree in Economics from Trinity College in Hartford, CT.
Contact Kirk: Use the Contact Form here or call (781) 218-2250.

Disclaimer:  This article is intended solely for informational purposes only, and in no manner intended to solicit any product or service. The opinions in this article are exculsively of the author(s) and may or may not reflect all those who are employed, either directly or indirectly or affiliated with Innovative Advisory Group, LLC.

3 years ago

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