The Get Smart in 60 seconds series is designed to be like an espresso shot, a concentrated article dedicated to the Smart Investor on the go, with ideas or concepts delivered in 250 words or less.
It’s hard to keep your eyes off the stock market these days.
The news is relentless.
Banks and REITs are taking a beating.
Malaysia announces a movement control order.
… with it, the stock market has been incredibly volatile.
And when your wealth is tied to extreme swings, you can’t help but watch.
But you shouldn’t, here’s why …
Wall Street journalist Jason Zweig made a key discovery in his book, Your Money and Your Brain, saying …
“It’s vital to recognize the basic realities of pattern recognition in your
a) It leaps to conclusion
b) It is unconscious
c) It is automatic
d) It is uncontrollable ”
You see, our brains are hardwired to recognise patterns.
Most of the time, this characteristic helps us survive.
If we see a car coming our way, we recognise it and avoid it.
But when it comes to investing, pattern recognition works against you.
In effect, your brain is working against you.
Get Smart: Shut it off
Thankfully, there is an easy way to limit this problem …
Simply remove the column with the daily stock price movement.
Think about it.
Daily movements tell you nothing about a stock.
If you know what stock price to pay, all you need is the stock price on the day. That’s all.
So, go ahead. Do it. Save yourself from the unnecessary anxiety.
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