In my previous story about chapter nine in Peter Mallouk’s book “The Path,” I shared that temperament is more important than knowledge. Today let’s talk about euphoria and fear.
Euphoria seems to appear when the overall market skyrocket to the moon and your fellow neighborhood just shouting around, “GET ALL IN!!!”. We are humans that can be easy to be affected, and that’s normal. Herding phenomena like this not just happening in the stocks market but apparently in all aspects of life.
“ABANDON SHIP!!” when the market bear is all that you will hear from your neighbor. It is the same herding situation when it is normal to follow the crowd to abandon the ship because you will feel safe. That’s not going to work in the financial market, and probably in life too. Fear, on the other way, works just the opposite with euphoria but precisely brings you to the same disaster.
I have heard that only dead fish follow the wave.
To become a great investor, controlling your emotions is critical. In my previous story, I shared about rules.
I’ve highlighted some advice from Alan Greenspan in this book. Here is what it says:
Alan Greenspan, former Federal Reserve, has learned that almost everything is noise. The best investors are never scared into selling, embracing the opportunity to buy when others are fearful.
Greenspan is endorsing only one tradable concept: control your fear and greed. Control your emotions, avoid the herd, and things are very likely to work out.
Sandiaga Uno, the founder of Saratoga Investama, said that the way his company does in the stocks market is after doing deep analysis and buying the shares. He has the analogy that they put their shares in a safety box and throw the shares key away.
For me, that’s the best analogy to control your fear and greed. Throw the key away, meaning that you should not be listening to the noise from a financial guru.
Maybe this blog seems too simple but trusts me. It’s hard as hell to follow this advice. In 2020, PT Panca Budi Idaman Tbk (PBID) plummeted to more than 30% in my portfolio. In that situation, it’s tough to stay rational with your judgment in the first place you bought that stock! Luckily, I’ve made it to ride the wave, and in around march, PBID skyrocket to about 100% in my portfolio! Still, it‘s hard to keep your desire to take profit from that gain! Finally, yesterday I’m comfortable with my percentage of PBID. See, riding the wave up and down in the stocks market is not very easy. I hope you guys can ride the wave smoothly and have your financial goals! Would you please subscribe to this blog and comment if you guys don’t mind? Peace out
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