Printer Friendly Version
Also: How Emotions Influence Investment Decisions

Dr. Richard Geist's Rules For Using The Power
Of Your Emotions To Out-Psych Wall Street

       1. Leverage your emotions, don't exorcise them. The only way to succeed in the market is to understand how your idiosyncratic emotions undermine or enhance your investing decisions.
       2. Don't just rely on the facts. Uncertainty in the market is too pervasive to be transcended with only facts and figures. Merge the facts with an understanding of the deeper psychological forces that underlie most of the costly judgments and spectacular achievements of Wall Street.
       3. Know yourself. Master an investing behavior in harmony with your own personality and lifestyle. Concentrate on how you react to success and failure, how you tolerate anxiety, and how you react to the pressures of the herd.
       4. Understand the nuances of risk. It is not just about market volatility, but also how you feel when buying and selling stocks.
       5. Break the taboo. Discard the conventional wisdom about forgetting your investment errors and "moving on." Learn to understand the psychology of your mistakes so they don't happen again.
       6. Empathize with management. Recognize that people running companies you want to invest in share the same human emotions as you do. Empathizing with your emotions allows you to collect invaluable subjective data to make better investing decisions.
       7. Recognize your investing anxieties. Rather than using systems or methodologies that attempt to eliminate your emotions, get to know your idiosyncratic anxieties and learn to leverage them to better performance.
       8. Be an interpersonal investor. An ongoing connection to a trusted other provides support in stressful times, expansion of our ways of seeing the world, and, paradoxically, protection against group think.
        Editor's Note: In his recently published book, Investor Therapy (Crown Business, 291 pages, $24.95), Dr. Richard Geist, a psychologist and investing guru tell you how to out-psych Wall Street. The book is now available in bookstores and on Amazon.com, and barnesandnoble.com.