Wednesday, 1 June 2011

On becoming a rational investor (Part 4 of 9)


Achieving a positive result in your bank account will allow you to devote your gains to helping others, if that is your wish. For each disruptive event, there is an investment strategy that can help you make a profit.

Rising share prices represent the easiest situation to deal with because most people can figure out that there is plenty of money to be made if you borrow at 6% interest and invest at 12% return.

What makes rational investment difficult is our psychological resistance to letting go of worry, recognizing past mistakes, and taking practical action. In addition, a wise man must accept that an investment method that proves successful in one environment frequently becomes unsuitable when the context changes.

To be continued in the next post.

[Text: http://johnvespasian.blogspot.com]

[Image by netstrolling under Creative Commons Attribution License. See the license terms under http://creativecommons.org/licenses/by/3.0/us]