Bulls, Bears, and How to Avoid Becoming a Stock Market Crash Victim

Jan 18, 2019

The worldwide investment markets volatility brought this quote to mind even though the day is trading favorably so far.

To bear trials with a calm mind robs misfortune of its strength and burden. - Seneca

 

With the advent of technology and the ability to trade electronically, program our buy and sell orders, investment markets move faster than ever before. When the markets hit certain thresholds or ceilings, activities take place automatically. And, depending on how you program your trades, those events that start to move the market, create momentum. Then the media pundits get a hold of the information that’s making headlines, put their spin on what's going on in the markets and the markets move further and faster.

Individuals who lack market confidence, to reference Seneca start acting irrationally and without a calm mind to the information or media conjecture alone responding instead physiologically, and not considering their original investment purpose. For example, a loss in value within an investment is only a loss financially realized if you sell. Depending on your investment goals, and what’s really happening behind the headlines, it might actually be time to buy more of that company because the market is now "on sale."

Additionally, different trading goals require different strategies for success. Not remembering our goals and strategies first, as well as allowing our emotions to terrorize us with the body's natural tendency toward loss aversion and pain avoidance creates a physiological cocktail that is both physically damaging and perhaps financially devastating as well.

With my biology-based approach to success and investing, we can take a few simple steps to help mitigate the possibility of ineffective decision-making when it comes to investing.

1. Breathe.
2. Revisit your investment goals FIRST.
3. Suspend judgment.
4. Stay curious and request more information that is objective.
5. Find your highest resource state and evaluate the facts.
6. Make a decision.
7. Commit by taking action.
8. Evaluate new information coming in avoiding judgment after taking the committed action.
9. Rinse. Repeat.

(For more on my Biology-based Approach to Successful Decision-making, grab my free strategy here.)

Make sure you avoid the natural tendency to beat yourself up about an ineffective decision. If we transform the words "good" and "bad" to simply "effective" and "ineffective”, we give ourselves more power to stay impartial as best we can when making decisions. It helps mitigate the sting of failure, which with judgment always brings along condemnation and its other ineffective emotions/behaviors like guilt or remorse. This just creates self-flagellation and makes you a greater ineffective decision-maker.

Finally, when we can be impartial while evaluating both our successes and failures and avoid the "judgment trap," the more effective we become at decision-making. The more effective decision-makers we become, with each successive "effective" reinforcement, our confidence grows, and we build the neural pathways to make better decisions overall in any area of our lives. To become a more effective decision-maker in the investment realm, we have to educate ourselves with trusted resources.

Even the best decision-makers can only make a reasoned decision with the quality of the information available at that time. The decision may be correct, but only to the extent that the information is accurate. That is why I recommend you take a serious look at our regular contributor and top market analyst Jim Woods investing publications. You can check out his most recent show here where he discusses different strategies for investing to create different outcomes. While you are busy being the best at what you do to generate that surplus income for investing, Jim is continually studying the markets, analyzing individual companies and their financials, tracking their performances, and making his recommendations based on proven systems that have outperformed the markets for decades.

In our Season Three kickoff, Jim discusses the importance of having different strategies for your stated objectives and desired outcomes. In addition to sharing some of his top picks right now, he also shared how the tactics vary for each strategy. Once you watch this broadcast, you’ll begin to feel the way I do about the quality and experience Jim brings to his recommendations, and why I selected him as my Top Featured Expert.

While there are no guarantees in life or the stock market, you would like to know you are making the most informed decision based on the most recent information available at the time, wouldn’t you? Of course, you would! So, naturally, I encourage you to follow up your curiosity by visiting his website and different strategies. Only then, will you see for yourself how you can incorporate Jim’s depth of knowledge and experience to give you that objective information you need to succeed at investing and create that piece of mind Seneca espouses to weather any market conditions and still profit.

Check out Jim’s latest advisory service, Bullseye Stock Trader right here for a risk-free trial for Unlock Your Wealth fans so you too can profit from Jim’s wisdom and expertise.

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