Are All Investors Perfectly Rational?

Mansion House’s Garth Kinlocke shares how feelings that you experience whilst investing, which are often undiscussed, can impact our decision making: 

In recent weeks, I’ve had a lot of conversations with clients around their feelings and emotions with investing. 

Typically, how we feel is rarely spoken about in this industry. 

We like to focus on net yields, Greek letters, % points, etc. 

 
However, the range of emotions we feel can have a big impact on our decisions. 
 
If you’re up +10%, we feel great and investing is easy right? 

 
And if the markets are down, we feel anxious and want to withdraw everything. 

 
These feelings are perfectly normal, however they are the opposite of how the ‘successful investor‘ should act. 
 
Market volatility is normal, healthy even and should be welcomed with open arms. 
 
It’s the reason why you get compensated with higher returns over the long term. 
 
During these rocky times, this quote by Charlie Munger couldn’t be more relevant: 
 
“The world is full of foolish gamblers and they will not do as well as the patient investors.” 

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