Tuesday, 28 June 2011

Emotional investing - it couldn't happen to me!

I bought a stock on Friday for several reasons
  1. I though it was cheap;
  2. I think it has a near term catalyst to realise value; and
  3. The timing of that catalyst is relatively certain (2 - 3 months)
While I know the stock price isn't going to do a whole lot between now and then and I've set up various news alerts to let me know if anything happens - I can't help but check the stock price several times a day.

I realise that this doesn't make sense and I should leave it well enough alone but for some reason I'm getting worked up as the share price continues to fall (down 5% in 2 days of trading since I bought in). I suspect it's because I invested in this stock using a strategy that I haven't used before and put a fair amount of my liquid capital behind it.

I have never before subscribed to the idea of 'market emotions' but seeing my irrationality over the last two days I may be forced to rethink what other irrational emotions move markets...

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