To manage your finances properly, you do not just need to have technical knowledge; Investors have psychological characteristics that contribute to making investment decisions in a more important way than we think.
Author Julia Regadir says – in a report published by the Spanish magazine “psicologiaymente” – that you may have seen in many films that the psychological image of the stock market investor shows him to be a greedy and inhuman figure who just came out act itself. interest, and despite the persistence of this The stereotype is in fact wrong.
The author presented an analysis of the relationship between psychology and investment through the key psychological characteristics of stock market investors.
The relationship between economics and psychology
The author shows that the stock market is about the economy, but it has a very close relationship with psychology, as the market is a reflection of the interactions between the millions of people who make investment decisions based on their feelings and emotions, the most experienced investors know that markets rise when investors are happy, and fall sharply When fear and panic overwhelm investors, these factors make a good investor not only a specialist in technical issues related to the present and future of companies, but also ‘ a good analyst of psychological climate any time. It can therefore be said that this climate has a very direct impact on the revaluation or devaluation of some companies and markets.
Personal and psychological characteristics involved in investing
To understand this whole process, the author highlighted the psychological characteristics that greatly influence long-term investment, with the goal of understanding the variables that affect investors the most when it comes to managing their own money. In the following, we review the most important of these characteristics.
Ambition is one of the basic characteristics of an investor in the stock market, when we invest we do so with the aim of maximizing returns on our savings, whether in the short, medium or long term.
It is the same quality that ensures research and analysis of different markets and companies to discover those excellent businesses listed at low prices, and to be an investor you need to know how to optimize time and resources. With ambition we will be able to set measurable goals for ourselves to gradually improve our results.
Planning helps us to develop our own investment strategy and it will be very helpful for us to know how to act in the financial markets at all times.
The investment plan is supposed to include all those rules that will follow our investments; From the market in which we operate, the risks we take for each operation, the indicators we use, to the percentage of money we invest in each company.
The author goes on to explain that in the face of a changing environment such as the current one, the investor must have a great ability to adapt to discover new trends, growing markets or potential bubbles that may ultimately affect their investments. , as was the case in the 2007 financial and property crisis.
The author pointed out that the ability to adapt is something we can learn from our own experience through the different situations we are in in the markets, but we can also learn by reading and analyzing historical events that take place in the course of the markets have changed, such as e.g. such as the Wall Street Crash of 1929, or the oil crisis of the 1980s. Or the internet bubble of 2000.
The author explains that investor discipline depends on several factors, among which we find discipline in our investment strategy and discipline in savings, and discipline in our strategy lies in adhering to the rules and guidelines set out in our investment plan.
On the other hand, the discipline of saving consists in allocating a certain percentage of our salary each month that is set aside for investment; With discipline in these two areas, we will eventually be able to create a good legacy.
The author emphasized that patience is very important in a long-term investment; In today’s society we are used to demanding immediate results to quickly meet our expectations. However, the long-term investment is not like a 100m run, it is more like a marathon, where you have to be patient, bad weather and exhaustion to cross the finish line.
Resilience is the ability of people to handle situations of stress and pressure. In the markets we find ourselves in this type of situation every day, and it is necessary to have a good emotional balance to get up again every time. you feel insecure.
In times of crisis we need to be more resilient, although our investments bring huge losses, the market in this type of situation offers us greater investment opportunities, which will give us excellent returns once this adversity is over.
The author emphasized that continuous improvement is the factor that allows us to improve the previous six traits day by day, therefore it is important to work on our weaknesses so that our psychological traits are more powerful.
There is always room for improvement in everything, if we can improve every day in the way we plan more efficiently, in the discipline of our investment plan, in the ability to adapt to new environments, or in patience in certain market situations, we will make a significant improvement as investors.
Balance between technical and psychological skills
The author added that in order to get good results in the investments we make, it is necessary to properly combine our technical skills with our psychological preparation. Without a doubt, a person who has excellent technical training but does not know how to control his emotions will lose when he constantly invests his money in the stock market, where he will make investment decisions that are influenced by greed, fear, panic or ecstasy. .
So – according to the author – so that this problem does not affect us negatively; It is highly recommended to receive in the first place the necessary training on all those investment techniques that enable us to function in a safe and logical way and work on the psychological aspect from the moment we start investing with real money. .