|These past few weeks, we've looked at "avoiding the avoidable mistakes" from Mr. Carlson's marvelous book, Eight $teps to $even Figure$. I've enjoyed discussing these possible pitfalls that may prevent us from achieving financial success for our future. As investors, still somewhat new to the world of online investing, our focus is typically centered on avoiding others who may take advantage of our naiveté.
It's also important to point out, though, that we can be one of our own worst enemies. Understanding how our individual personalities, emotions, and human behavior can impact our investing strategy has proven to be an excellent preventative measure.
When we think of the stock market, rarely do we consider how the above may work against us in the long run. Awareness of these "human foibles" can provide for our continued success in long term investing. We are learning to be proactive as opposed to reactive. With this information we're less likely, down the investment road, to ask ourselves, "Now why in the world did I do THAT?" Or the even sadder question, "Will I ever recoup my money?"
While no one can guarantee that this won't happen to any one of us, with this information I believe we're less likely to just jump in blindly. Anything that causes us to pause and reflect prior to making a decision is worth the effort.
Mr. Carlson explains two other important "investment goofs" that may hinder our investment strategies of thoughtful and thorough research about our potential companies.
The first is "paralysis from analysis" and I have personal knowledge of this goof. Fifty years worth, to be exact! Mr. Carlson reminds us, "Unfortunately, too many investors fail to do anything because they fear what they don't know. Consequently, they do nothing."
Again, guilty as charged, until just one short year ago. I had feared investing for much of my life and as a result, I had done nothing! Mr. Carlson also reminds us that this "foible" is the primary reason so many people never even start an investment program.
Thankfully, we don't have to take the blame for that one. If you've been with me from the beginning, that is no longer a fear or a fault of ours. We took charge of the situation, we learned what we could and we jumped in. We are no longer guilty of "paralysis from analysis." A pat on the back to all of us who felt empowered enough to overcome this potential barrier for our future financial comfort (we trust
no guarantees though).
And finally, our last potential investment goof: "the grass is greener on the other side." This often over-used expression cannot be ignored. As I look at my own portfolio of stocks, my first thought is always, "Gee
these aren't very good. There are other ones that are better. I think I'll sell mine and buy those."
Many of us wish we could be someone else or in a different place or have a different job. This type of thinking may be faulty with our investing portfolio, though. So, let's stop and think before we decide to sell or buy. Trust that you're not just doing this to seek out greener pastures. As Mr. Carlson reminds us, "Rarely is the grass greener elsewhere. That's especially true in investing."
Thank you for joining me,
||On behalf of BUYandHOLD and all of the BUYandHOLDers who read this column, we would like to offer a great big Thank You to Joyce Roberson for a great year of "The Mom Chronicles." Beginning next week, we will have a new "Mom," Linda Goin, to bring you along as she begins her adventures as a novice investor.
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