4 Things Love and Investing Have in Common

By Boris SV @https://www.flickr.com/photos/borisv/4612169511/

02 Apr 4 Things Love and Investing Have in Common

Idealistic Expectations

Every lover has an ideal partner and that sets an expectation for the real partner. He or she will compare the real partner against these ideals, but only to get disappointed to find out that the lover is not perfect. No one is perfect in this world. We can always find flaws in a person if we want to. Every investment strategy has its pros and cons. There is no holy grail. Some strategies may require less effort but more patience. Others may allow you to see results in a shorter time, but comes with more effort and emotional impacts. Often than not, investors and traders keep searching for new strategies, believing there is a perfect one out there. They seek but never find.

Sustaining a Relationship is Hard Work

Each partner must put in his or her share of hard work to keep the relationship going. It is easier said than done and many relationships fail because of a lack in effort, or a naive belief that a relationship can self-sustain based on love alone. Similarly, investors and traders must continue to work on their craft, no matter how seasoned they are. Diligently executing the trades according to the plan and rules. Diligently recording the trades and track the portfolio returns. You cannot expect to find a holy grail strategy that allows you to do nothing and reap profits for the rest of your life. The financial market is a harsh partner. She will punish you dearly if you slack off. Unlike your lover, the financial market has no love for you, and she doesn’t want you to succeed. Hence, you will need to put in greater effort to keep the relationship with the market if you really love her. If you keep doing the right things, the financial market does reward you in return, but you just do not know when.

Handling Emotional Roller Coaster Rides

A lover will definitely feel a range of emotions in a relationship. Lovers experience bliss and happiness during the honeymoon period. Lovers experience anger and frustrations during arguments. Other times, jealousy, love, regret, joy, hope, gratitude, or even hatred, could be felt. Likewise, the financial market toys the investors’ feelings from time to time. Often, investors feel excited and optimistic when the market is bullish; feel depressed and disappointed when the market is bearish; and feel bored and impatient when the market is not moving. As an investor, you can give up. You can choose to break up with the financial market and never to see her again, since she has brought you great pain. Or you can accept that emotions, good or bad, are part and parcel of investing. Handle these emotions maturely and keep investing.

Don’t Let Ego Get in the Way

After the relationship matures, it is natural for either partner to crave for more control, knowingly or unknowingly. Every lover thinks that he or she is right during an argument, the forgiving one, or even the victim in the relationship. The lover may think that the way to overturn the situation is to fight back, to show he or she is the stronger one and take control of the relationship. Somehow, things get worse when either lover attempts to gain more control, just like countries engaging in an arms race, fuelling more animosity in the process. A trader is unlikely to cut loss when he thinks he is right and the market is wrong. It is important to accept that you are vulnerable as a human. The market is bigger than anyone of us. Accepting vulnerability will allow you to bow out of bad trades when the market tells you so. Do not battle the market with your ego. It is very expensive to do so.

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