MICHEL PIREU: It’s unwise to be bored silly when investing in a bull market
The need for excitement may lead overly confident investors to take unnecessary risks
Become "more humble as the market goes your way" — Bernard Baruch. It feels pretty good when things go your way in the markets. And it would be nice to assume that it’s due to your intelligence and your skills as an investor, but that’s unlikely to be the case in the wake of a bull market. It’s safer to assume that your success has little to do with you. Any other way of thinking could prove costly when the music stops playing. Researchers have found that the brain activity of a cocaine addict who is expecting a fix is virtually the same as that of people who are expecting to make a successful financial gamble. The danger in allowing a bull market to increase your confidence as an investor is that it can lead you to take unnecessary risks or make silly mistakes in order to continue to get that high. Bull markets can force investors to abandon a good process. The temptation to change your strategy when things are going well can be overwhelming if you don’t have the resolve to stay th...
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