Monday, February 9, 2009

Pride has no place in investing!

I know people who attach their self-confidence to the ebb and flow of the market. I have made the mistake of taking pride in a stock pick only to regret the choice a moment later. I have learned to attach pride to the work it takes to make that investment choice. I take pride in the process of the "homework". Reading the balance sheet, reviewing the competitors, looking at the opportunities specific to that company, weighing the obstacles that have arisen in the current economic environment, and then reading the charts. The market does not listen to my emotions. The market does not react with kindness and sympathy to my pride. The market is coldblooded. You must first remove emotion before you even look at a stock. For example in Dec. of 1999 I liked Corning (NYSE:GLW) at $40 a share, only to have it sink to $1 in 2002. I would have been depressed and sold out if I were emotional about the choice to invest. The fundamental reasons were still there so I continued to buy it. Today, even in this market, I have gained from my rationale, and not my emotions. What emotions do you feel when you open your investment statements?

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