September 21, 2008

Stock day trading – Emotionalism is another matter.

Carefully controlled classroom experiments in speculative behavior have shown that, even when relieved of paying commissions on numerous transactions and of the emotional involvement of handling real money, people tend to chalk up heavier losses than gains”very much as they do in actual investing.6 Furthermore, the lack of correlation between speculative success and (1) intelligence or (2) professional investment experience, suggests that some set of as-yet-unknown emotional factor is at work. Donald I. Rogers, Business and Financial Editor of the New York Herald Tribune, quoted an unnamed broker to the effect that many investors lose money intentionally (on an unconscious level) in order to assuage deep feelings of guilt.7 Whether or not this is so, the fact is that few investors are really successful in the market. They tend to buy a stock on the crest of its rise, hold it while it goes down, and sell in disgust either before it recovers or when it rises barely enough to produce a slim profit.

Stock day trading – Emotionalism is another matter.

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