Have you ever invested in shares in a particular company and watched the share price fall after you invested? Ouch! Have you held on for years afterwards in the hope that the share price will recover? And, you are still waiting?
Perhaps you are so disappointed with your early investment choices that you have yet to make any further share investments. Good money after bad? If so, you may regard investing as just another form of gambling, but is it?
You may have seen something that the rest of the share market has yet to see. If so, you have taken a big risk that may take many years to bear fruit. The risk that you have taken may be much greater than you realise. If so, you may have placed more capital in the share investment than you are actually prepared to lose. It is only natural to feel frustration and disappointment when you see the share price continually fall from your initial purchase price.
Perhaps you have recognised a great new investment opportunity that other share investors have also recognised, but acted once everyone else has already invested in the asset and are now seeking to capitalise their gains.
Perhaps you are the only one to recognise this investment opportunity but there are factors you had not considered (both internal to the company and external). If so, it may be a factor of where you source your information, and the range of information sources you utilise.
Yet, it is possible to make share investments that consistently grow over time, giving you ongoing dividend income and/or capital growth from your investments. The secret is all psychology: Yours and those of groups of investor who operate on masse with one another (such as mum-and-dad investors or institutional investors).
Today, I have asked more questions than I have answered. Over the next few weeks, I will answer these questions (and more). In particular, I will start by answering the question of whether or not investing is another form of gambling. I will then introduce some of the common psychological factors that influence investor behavior in the share market. Much of what I will be sharing on this page comes directly out of my doctoral research. So, be sure to bookmark this page so that you can return to it on a regular basis.
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