Are You Emotionally Invested in Stocks?

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Are You Emotionally Invested in Stocks?

Posted by OutOfYourRut 343 days ago, popular 342 days ago (http://outofyourrut.com)
Category: Stocks | Tags: investing stocks

Money is the fuel you use to power your effort to live a more fulfilled life. When the voice on the radio says “stock prices fell hard today,” the words you hear are “your hopes for the future fell hard today.”

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drake 343 days ago

You almost have to believe in Buy-and-Hold of stocks as an act of faith. There's nothing to prove that it will work. We just have history and hope that history will repeat.

RobBennett 342 days ago

I agree with you that Buy-and-Hold is a matter of faith, Tom. To be fair, I think the same can be said of Valuation-Informed Indexing. Some of us are Methodists, some of us are Baptists and some of us are even crazy Catholics. WhatChaGonDo?

It sounds to me as if you are making a suggestion that the historical record supports Buy-and-Hold, that if history repeats the Buy-and-Holders will end up okay. I see it just the other way around. My take is that, if history repeats, the Buy-and-Holders will be slaughtered.

Both Buy-and-Holders and Valuation-Informed Indexers look to the historical record for guidance. The difference is that Buy-and-Holders presume that the risk level for owning stocks is roughly the same at all times. The risk level WOULD be the same if investing were a rational endeavor. My problem with the presumption is that it is my belief that investing is a highly emotional endeavor and that presuming rationality will thus just get you in lots of trouble.

But it could be that I am the one letting my faith undermine my ability to look at the historical record objectively. It's been known to happen! There are lots of good and smart people who think I am out to lunch re this stuff. There are many more who think I am wrong than there are who think I am right. That much I know for certain.

In any event, I am grateful to you for taking time out of your day to share your thoughts on my ravings. It's always nice to hear your gentle and intelligent voice. I hope things have been going well with you since we last had a chance to talk things over a bit. Please take care.

Rob

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