In general, there are three situations after you have bought some shares of XYZ company (assuming XYZ company is a fundamentally excellent company, instead of profitability, cash flow and dividend return).
EQ investor: WHY? Why I bought it so FEW. If there was a chance, I would buy more.
(Mood is down since the chance is gone. Mood downs few days even EQ investors earns money from XYW company. In the mind of EQ investor is "If there was a chance,... If there was a chance,... If there was a chance,...")
Happy investor: No bad. Mr Market eventually agrees with my judgement. Let's wait for good price to close the deal.
EQ investor: WHY? Why I bought it at the begining. If there was a chance, I would never buy it.
(Mood is down since money is stuck. In the mind of EQ investor is "If there was a chance,... If there was a chance,... If there was a chance,..."))
Happy investor: Hmmm. Patience is needed. As long as the company does a good job in terms of profitability, the dividend return is already very attractive for me in the long term.
EQ investor: WHY? Why I bought so MANY. If there was a chance, I would never buy it.
(Mood is down since EQ investor get loses. In the mind of EQ investor is "If there was a chance,... If there was a chance,... If there was a chance,..."))
Happy investor: Hmmm. No bad. With another 10% price depreciation will be a good entry point for me to acquire more shares of XYZ company.
Happy investor, on the other hand, makes decision based on the fundamental condition of a company. Fundamental condition cannot be changed in seconds as the market price does. In other words, the decision of happy investor is more reliable in the long term. Happy investor strongly believe that we cannot predict the future. Therefore, Happy investor is immune from the spell of "If there was a chance,..."
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Written by: Xaivier Chia
Situation 1: When the acquired XYZ stock UPs
EQ investor: WHY? Why I bought it so FEW. If there was a chance, I would buy more.
(Mood is down since the chance is gone. Mood downs few days even EQ investors earns money from XYW company. In the mind of EQ investor is "If there was a chance,... If there was a chance,... If there was a chance,...")
Happy investor: No bad. Mr Market eventually agrees with my judgement. Let's wait for good price to close the deal.
Situation 2: When the acquired XYZ stock Does Not Move:
EQ investor: WHY? Why I bought it at the begining. If there was a chance, I would never buy it.
(Mood is down since money is stuck. In the mind of EQ investor is "If there was a chance,... If there was a chance,... If there was a chance,..."))
Happy investor: Hmmm. Patience is needed. As long as the company does a good job in terms of profitability, the dividend return is already very attractive for me in the long term.
Situation 3: When the acquired XYZ stock DOWNs:
EQ investor: WHY? Why I bought so MANY. If there was a chance, I would never buy it.
(Mood is down since EQ investor get loses. In the mind of EQ investor is "If there was a chance,... If there was a chance,... If there was a chance,..."))
Happy investor: Hmmm. No bad. With another 10% price depreciation will be a good entry point for me to acquire more shares of XYZ company.
In summary
EQ investors always make decision based on the market price of a company. Since the market price is very volatile in the short term, the decision made by EQ investors is very weak and not reliable in the long. Besides, no matter what situation is, the mood of EQ investor will never get better. Even he/she earned lots of money, it has negative effect to his/her health condition in the long term. In other words, EQ investors have been cursed by "If there was a chance,..." spell.Happy investor, on the other hand, makes decision based on the fundamental condition of a company. Fundamental condition cannot be changed in seconds as the market price does. In other words, the decision of happy investor is more reliable in the long term. Happy investor strongly believe that we cannot predict the future. Therefore, Happy investor is immune from the spell of "If there was a chance,..."
That's all for today. More fascinating articles and sharing will be updated from time to time in Xaivier Blog. So, you are welcome to subscribe our feed, look at our sitemap or simply visit our Homepage for latest sharing.
Written by: Xaivier Chia
(P/S: The above sharing is solely based on personal insight. Please do not take it seriously. However, your valuable feedbacks are very welcome. )
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