Dear readers,
Thank you for coming here!
Greed bites!
Recently, I purchased two stocks that grew 7% and 13% within two days.
I thought they might grow further with no solid reasoning.
So I kept them.
Now I am at -6% and 0.5%.
These were among the speculative buys, which I knew I should just let go at some profit.
But Greed still ruled.
Thinking back, this just did not make much sense.
I would be very happy if my portfolio could achieve 7% or 13% growth over a year.
Yet I believed that kind of return was not enough over the course of two days.
Totally unbelievable!
If I have to assign some “reasons” to it, I can think of three.
- Affected by recent event — I just let go of a stock at 10% return. Now it is close to 40%.
- Scale bias — I have been dealing with 40% gain and 60% loss. So 7% and 13% seem pathetically small
- Illusions — They have grown that much. Why cannot they continue?
None of this is of sound logic, but weakness in our mind.
And that is what Greed does to us, taking advantage of our weakness to get to us.
Therefore, below two guidelines seem logical:
- For long-term holdings, just hold them
- For speculative buys, never worry about the possibility of selling too early. Any return is good.
Happy Investing!
Till next time!
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