EQ & Investments: Bull, Bear Or Human

EQ & Investments: Bull, Bear Or Human

Markets are supposed to be rational, but with an
economic system based on scarcity, how do investors
behave with emotional intelligence? Experts in
behavioral economics and emotional intelligence tell
us we sell winners too soon and hold onto losers too
long...

The ability to accept loss and feel the regret we might
have may be the greatest obstacle to gaining wealth.
Lacking EQ, investors are more likely to hold on to losers
too long. Why? We avoid the "negative" feelings, and rather
than feel the remorse, we want to move beyond it--into some
action that will give us back what we lost. The losses that
hit us hardest are the first few dollars we lose, so additional
losses aren't as painful. With this increased risk tolerance
we tend to throw more good money after bad. We're emotionally
wired to avoid pain. And, given a positive move or a negative
one of the same amount, there's more intensity on the negative side.

We are more driven to avoid regret than to have pride. So while we
hold losers, we also tend to sell winners too soon. Rather than
wait for a small gain to grow, we tend to take our profits too soon.
Why? Because every additional dollar of gain gives us less satisfaction.

Investors are also resist change--even beneficial change. The more
choices we have, the more we tend to stay in status quo. The EQ of
investing would tell us --do your homework, pick carefully, determine
a minimal downside loss and upside gain. The EQ challenge then, is
self-managing the emotions that come with taking rational action in a
scarcity system.

LANCE ARMSTRONG: ON THE HERO'S JOURNEY

No hero ever starts out looking like one. From a single parent family
in Plano Texas, disappointment, despair, and disillusionment, put Lance
Armstrong on a bike that took him out of Plano and on the ride of his life.
Youthful brawn led him to win his first Tour de France; inner strength and
finesse allowed him to wrestle with death, and conquer multiple titles in
the world class race.

"It's not about the Bike." From eating dirt on a rough road to shaking with
fear as he faced his own death, Armstrong embraces both his strength and
vulnerability, showing us the hero, once revealed is both warrior.

Lance Armstrong shows us how leaders become heroes. Following him through
courage, fear and conquest---a whole range of emotions, we witness his
transformation from a champion of outward action and athletic prowess to the
tenderness, compassion, and integrity that takes him to the edge of life and
back as a champion of heart and spirit.