Observations on
Psychology and the Markets
When you check your portfolio to discover that your holdings are going down, or already in the red, how does that make you feel, physically? Likely, it is a slightly painful feeling and you get sweaty palms, feel lightheaded, get a weird feeling in the pit of your stomach, or maybe you feel pessimistic (or optimistic)?
This week I’m in Orlando, Florida, getting ready to speak on Saturday at The Money Show. On Thursday, Friday, and Saturday I will also have the opportunity to interview various strategists and experts for StockChartsTV.
This past weekend my family celebrated our 100th geocache! If you’re not familiar with geocaching, it’s essentially a real-world scavenger hunt that is web-based. Using an app on your phone that works via GPS, you can go on a scavenger hunt from literally anywhere you are in the world. My family has done this on our travels across the country and as well around the world. My wife and I have done it together but it is also something we really enjoy doing as a family with our 12 and 3-year-old children, as well as our family dog. We follow the directions (via the app) on our phone to find cool and unique treasures.
Last week I was interviewed on a podcast called AlphaMind and we had an interesting discussion about market analysis, technical analysis, behavioral finance, and a lot about the mental game of trading and your mental state. This includes how you approach things, your routines and how you set yourself up for success mentally when you’re getting ready for the trading day.
Just coming out of my power week this first week of January, which is something I do at the end of every year. During that week I take a step back and reflect on where I came from, any progress I have made, where I am currently, and where I would like to go. That one-week allows me to really chart a good course for the next 12 months.
Every year between Christmas and New Year’s I schedule a Power Week. I first heard of this idea from Charles Kirk of The Kirk Report who talked about his year-end planning session. As with many other personal development projects, I used that as an inspiration and made it my own over many years of trial and error.
Last week I did a webcast called “Better Routines Make Better Decisions“ about investor routines and how you approach the trading day. Most of us begin each day by grabbing a cup-of-Joe and sit down to begin our daily investment routines. In this webcast, I detail my morning ‘coffee routine’ and break down my exact process, which you can find here.
Did you know that the lessons you learn when learning to play in instrument could also be applied to investing and the financial markets? It’s true.
In college (go Buckeyes) I studied music and psychology while pursuing my passion for music playing the trumpet and singing. Here I am, several years later and still trying to justify my music degree to my parents, however, I am eternally grateful for that time I spent studying music. While it was not easy, it was absolutely full of rewards.
