When I came up with this topic, I thought this will just be one article. But as I write it, it turns out there are horde of things to discuss. I know that reading about the stock market is not the most interesting thing in the world, so I decided to turn this into a series. Just a disclaimer, I am not an expert and I am not giving any advice or tips. I’m just sharing my thoughts and maybe someone will take something from it.
Me and the stock market may seem like an odd couple. But for almost three years, I am enjoying this world of numbers and other terminologies I forget the minute I log off my online broker account. Understanding how the market works and doing well at it isn’t easy, but it is definitely not as hard or alien as I thought it will be. The concept is not impossible to grasp. Buy low, sell high. Simple enough right? Well, no. It requires a lot of learning. From investing tips, market forecast, to researching on the performance of your chosen stocks – there is a lot of knowledge to consume before you can confidently say that you know what you are doing. But, how to grow my investment is not the only things I learned in the stock market. I’ve also picked up a few helpful things that I can also apply outside the world of bears and bulls:
Set aside emotions when making decisions
Upon the advice of my brother, I bought a mining stock. After years of being stagnant, some legalities made this stock go up again and future seems really bright. But right after buying it, the price went down, in order to manage the loss, I bought some more, then it went down again, so I bought some more. Then, it went down again. It would have been a sane decision if not for the fact that all of that happened in just weeks.
I thought I was managing my losses by in reality, fear took control. If only I kept calm and waited for more development, I could have bought the stock at a lower price and be more effective in cost-averaging.
A year after that, I can now handle my emotions better. I just sold the first ever stock I bought. It reached its target price and I already have 20% profit (IKR!!!) on it. It was time to sell and even if I was feeling melancholy, I just have to brush it off. The thing is, it had also reached the target price a year before, but I didn’t sell because I love the idea of owning such stocks. And, it is my first ever stocks. But I have to snap out of it. 20% profit can be considered a unicorn.
In the stock market, no one can afford to be controlled by their emotions. And, there is no reason to let emotions take over – investment guides and technical analysis are easily available. Allowing your feelings get the best of you literally has a cost. So either you get it together or just say bye-bye to your money.
In the real world, the consequences of your emotionally fueled decisions won’t be showed in neatly presented tables. But you’ll see them as bothersome what-ifs, hear them in heavily breathed sigh.
Emotions are powerful, but they can really mess up the way we think. Some decisions need to be objective and you just have to take control over what you are feeling. Whether it is about buying that pair of heels or deciding to take on a career change, minimizing the influence of emotions can lead you to a much sounder choice. One that you wouldn’t regret once feelings fade.