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5 Deadly Investment Sins: Part 2

Royston Yang

This is the second part of a two-part series on the sin of anger, which is a common emotion investors experience when something goes wrong. The first part in the series addressed various methods to rein in the anger before it gets out of control, including setting up a “mood monitor,” doing careful and logical analysis, and waiting watchfully (and patiently).

However, there are more proactive steps we can take to stay cool even when we encounter situations that are bound to rile us up. You should implement these practices during the normal course of investing in order to keep your temper in check. By preventing anger from rising to the surface, we as investors can end up making better-quality decisions.

1. Force yourself to take breaks from your investments

As long-term investors, we should refrain from checking stock prices too often, as these tend to make us more emotional and jumpy. While it is definitely a good idea to monitor our investments for corporate developments or announcements, getting too obsessed with both stock prices and the state of our investments is counter-productive and may lead to outbursts of anger, especially when things are not going our way. Investors need to force themselves to take regular breaks from their portfolio to focus on other important things in life, such as family and relationships.

2. It’s business, not personal

It’s important not to take investment losses personally and to treat the entire process purely as business. Investors who feel that the market is “out to get them” will always end up feeling dissatisfied and frustrated, and this can easily lead to anger. Bad things happen from time to time, and it’s not always within our control. Investors need to view these occurrences with detachment and not let it affect them emotionally.

3. Keep an investment journal

An investment journal is useful for not just tracking all our investment decisions and actions, but also in capturing the moods and psychology behind those actions. By tracking your emotions and linking them to investment decisions, one can then clearly see how anger results in poor decisions over time. The act of writing also draws attention to your emotional state at the time a decision is made, and this helps you identify the raw emotion involved so you can recognize a potential pattern of anger and subsequently nip it in the bud.

4. Vent your anger productively

Finally, if you simply cannot withhold your anger or keep it in check, consider venting it in a productive manner. Play a game of squash, or just shut the door and yell at the walls. Such actions are a good way to let the anger dissipate without negatively affecting your portfolio.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.

Motley Fool Singapore 2019