Investing and the Fear of Regret and Greed

People tend to feel sorrow and grief after having made an error in judgment.

Investors decision to buy or sell a security are typically emotionally affected by whether the security is purchased or sold for more or less than the current price.

One theory is that investors avoid selling stocks that go down to the fear, to avoid pain and regret having made a bad investment. On the other hand, they also avoid selling when prices go up, because they are very greedy and are afraid that the price will continue to rise.

Many people wonder why they are not 100% or 200% profits have taken when they had the chance. Ie their Most investors will rationalize they ran these high profits down because they were afraid they would lose even higher profits. In my opinion, for many of these investors, it was just greed that prevented them from selling their stocks.

Any experienced trader knows that fear and greed are two emotions that can dramatically affect your success in the market.

You have to deal with controlling greed and fear every day. While there are no easy answers when it comes to the stock market, one thing I am sure:

If you're a greedy trader and always try to squeeze out every last point of each trade, it is only a matter of time before you end up with a lot less than you actually started!.

Oliver Velez of http://www.Pristine.com says greed "that small sample in each individual. "Part of our success in the market, he says, is learning when this little monster a little more room to work and when to curtail its actions give." Each event has two ultimate outcomes - either a win or loss ", Velez says. "Greed can gaze at the stars, without any consideration of the rocks below. It can prevent you from considering that there is a downside and establishing a stop loss, or develop a systematic way of exit or termination of a trade if in fact things do not work. "

The embarrassment of having to report the loss to others can also contribute to the tendency not to sell losing investments or obtain.

Some researchers speculate that investors follow the crowd and conventional wisdom to the possibility of feeling regret in the event that their decisions prove to prevent incorrect.

Many investors find it easier to buy a popular stock and rationalize it down because all the property and thought so highly of.

Copyright © 2005 I.E.C. Haramis haramis@greekshares.com

Ioannis - Evangelos (Akis) C. Haramis was born in Greece in 1951 and studied in Greece, the U.S. and Belgium. He has been active in the equity markets since 1972. Since 2002 he is New Business Development Managing Director at an Investment Bank and the publisher of