Investment Psychology 101
September 10, 2006 -
Everyone who has ever watched an episode of CSI (Crime Scene Investigation) knows that in order to solve crimes, crime scene investigators must determine a suspect’s motive. Likewise, a key determinant in tracking a serial killer is the psychological profile drawn up by FBI agents. Investment firms are well known for using psychology to sell. Fear and greed are two of the strongest psychological tools available to convince clients to turn their assets over to them for management. Criminal mysteries are often described as a “cat and mouse” game with both criminal and detective playing mind games with each other in an effort to coax the other into a mistake.
The world of financial investing is the same. Only too often individuals concede to the role of the mouse and never assume the role of the cat. And until more individuals assume the role of the cat, they will continue to lose. Unless this is the first time you are reading my blog, you know by now that one of my consistent themes is that you will not discover the truth unless you dig well below the surface deep down into the rabbit hole.
The majority of people tend to be trusting when skepticism should reign and tend to be skeptical when they should be trusting. Read more …
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