Hirschhorn: Managing the 5 Emotional Stages of Investing
When will markets turn around? A lot of that depends on investor attitudes.
It isn't the market, but rather the investor that goes through five emotional stages as they experience the roller-coaster ride of a turbulent or spiraling market.
Investors can optimize their trading skills by recognizing these stages early (see the video below) and moving through them as quickly as possible.
Because the market itself is a reflection of human opinion and mass psychology, the actual "signal" the investor should be paying attention to is when and if the sentiment on the street is that "all hope is lost, or nothing the government can do will be able to change this."
That could be where we are right now...
Doug Hirschhorn is the chief executive officer of Edge Consulting, a firm specializing in “Peak Performance Coaching.” He holds a Ph.D. in Psychology with a specialization in sport psychology, and has offices in New York and South Florida. His client list includes elite athletes as well as many of the largest banks, hedge funds and financial institutions in the world. Doug is presently at work on his new book, Street Smarts (Putnam, 2010).
Have a question for Doug? You can reach him through his Web site, DrDoug.com
Disclaimer: Doug Hirschhorn's expertise is in the psychology of achieving peak performance. He is not a financial advisor and does not make trading or investment recommendations or provide trading or investment advice. He is an expert on the mental game. Although Doug Hirschhorn has a Ph.D. in Psychology with a specialization in sport psychology, he is not a licensed psychologist and does not provide therapeutic, clinical or counseling services.