Is Your Own Ego Your Worst Enemy?
Yesterday I wrote about the pitfalls of emotional investing. I view emotional investing as the psychological consequence of our own weaknesses having exposing themselves. Emotional spending and investing are created by our own perceived weaknesses, but just as a perceived weakness can cause us to handle our money poorly, so can an unreasonable perceived strength - an ego.
I’ve been guilty of it myself - a couple solid stock trades and I think I’m the next Jim Cramer. Shoot, I’ve been known to feel a little bit like David Bach after I have a good month with staying on budget. This isn’t to say that being successful isn’t worth patting yourself on the back, because a little self-congratulating is always helpful when you’ve put a lot of work into something.
The problem is that when a little self-congratulation takes the form of an ego, we tend to make careless errors on a much bigger scale than we would have before we picked up an ego. If it’s dealing with finances, we may decided that we can make a bigger ticket item purchase because we can “budget” it into making sense. If we’re dealing with investing, we may decide to get after an even more speculative stock because we’ve “gotten good” and finding the needles in the proverbial investing haystack.
The trick is to stay grounded. This means being accountable with yourself at all times. I’ve found the best way to stay grounded after any form of success is to give myself a fair assessment of what I did right, but always find areas to improve. I know this sounds like a real bummer, but if you can let yourself enjoy success but never be satisfied with it, you’ll set yourself up for even greater victories in the future. Of course you can take the time to smell the roses, but think about it - successful people in vastly different areas are never satisfied with the successes they have, they just don’t let it go to their head. Think about Tiger Woods, he keeps winning, breaking records, but he also keeps finding areas to improve. It’s really no surprise that he’s consistently at the top of his game is it?
Tags: bonds, ego, emotions, Investing, investment strategy, stocks
