Investment Psychology (Musing)
The psychology of investment as many a guru will tell you is very much like the price action mock chart above. This is how retail investors (myself included) get caught out from time to time. More often than not, it happens even to the best of us. It is what I like to call a level 10 out of 10 mind game. People get caught unawares that there are forces greater than the foreseeable economic forces and price indicators.
I like to refer to the Wall St. Cheat Sheet or as they say, the Psychology of Market Cycle. The cheat sheet shows how most investors get sucked into the cycle and most of them get washed out. The thing is, most of us know the key to investment and that is to buy low and sell high. It’s pretty much a no-brainer. However, when it comes to putting money down, we are swayed from course and if unchecked, can enter into decisions that most will regret later.
So how does anyone invest then? The key is really to educate yourself with as much financial education as possible. Lower your risk by knowing more about what it is that you’re putting your money in. Know your investments is the key to doing well in any kinds of investments.