Fusion 101: Know yourself
Make Time to Think About Yourself
The first thing new investors should do is think about themselves and their personality. There are lots of sites which can assist some people in figuring out their own Myer Briggs type. For example this quick quiz.
If there is anyone out there who doesn’t know their type I’d recommend first reading the descriptions at some place like this and see if you can correctly guess your own type. Keep in mind self administration of MBTI is not advised as many people lack the necessary insight. Lack of insight is also a reason why most people fail at investing. Taking the test will help you start thinking about yourself. Thinking about yourself will make you realise the importance of learning and honing the correct investment path for your personality.
Without knowing yourself, you’re unlikely to choose the correct investing path for your personality. Without matching the path to your personality you’ll keep stepping off the path at the wrong times and that is the real killer.
Without knowing yourself, you’ll be less likely to identify and rectify your shortcomings in investing. Heck, even when you identify your shortcomings, rectifying them is not easy, or at least I certainly struggle in that area.
Psychology also has a great influence on the Stock Market. Investors are people and like most people react emotionally to news and other facts. And a person’s perception of fundamental and technical factors can be influenced by many things including money. Markets are all about perceptions of the future. If investors expect things to get better, stocks go up and if investors think things will get worse, stocks go down. And these expectations are constantly being adjusted, as investors digest every possible detail — such as economic news, earnings reports, economic data, political events and news and any other factor that might give them a clue about what the future holds. More important than the details themselves is how investors perceive those details and react to them. Facts do matter, but the only thing that really counts is how investors react to the facts. This perception of the details and facts depends a great deal on the individual psychological profile of investors and the total market is the collective psychological profile of all the investors.
http://www.abika.com/Reports/Samples/Psychologicalprofile.htm
Dean
Never was and never will be a Psychologist.
- Previous in Fusion Series Fusion 101: Investing Philosophy
- First Steps for an Investor – Dean Morel Feb 2007
- Behavioral Finance Part One – Dean Morel May 2008
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