Wednesday, March 17, 2010

A New Take on an Old Problem

As all active investors know, emotion is huge in making financial decisions.  Fear and Greed are credited with causing investors to make and/or lose money everyday, and if you can get those two emotions under control you've got it made in the shade.  But what about love and hate?  Just the other day, two active investors and yours truly admitted to each other that there are some stocks we would never buy because we have been treated shabbily as consumers by them (Telus, Bell, and Direct Energy were mentioned) - and that our reticence to buy them has hurt our portfolio.  (That's okay, we showed 'em!)  The three of us also admitted buying shares of companies we "like" for no other reason than we like them, often incurring a loss.  (Does this contradict Warren Buffett's credo that you should only buy companies you like?)  So whether you're a believer in fundamental analysis or technical analysis, don't just get fear and greed under control - ignore love and hate too.