Risky Business, Time for a Little Horatio Alger Stuff

I learned this early in life from a nice old man. I call him George.

George told me…

Manage risk properly my boy. Keep your emotions out of the game.

Whether it is real estate, equities, bonds, or commodities investing should always be free of emotional decisions.  Today one can hear from numerous brokers and individuals that now is the time to buy real estate. Then they pull the emotional cord saying, “prices have inched up, so hurry up and buy as interest rates are now poised to go up”.  The anxiety of missing out on a perceived good thing is set into place. Driven by fear and greed, this complacent attitude starts to rule the investment decision-making process.  Be careful be very slow to move, look at the real hard facts. Ask questions that mean something. Questions like: “How long can prices continue upward, is greed ruling?” and “What happens to prices if interest rates move?” and “What is the risk factor associated with an investment now, tomorrow, next year?” Questioning yourself along these lines will help measure the driving force of your emotions.

Once the real facts can be discriminated in an unbiased environment, investment success is much closure. Keep in mind that no crystal ball exists, so market risk is always a factor. Eliminating emotional investment decisions may raise the odds of success.