Why Do Our Intuitions Fail?
Investing is truly difficult. How can we make the right decisions in a complex market situation? Many people rely on their intuition, but in reality, that intuition often leads us astray. Today, let’s talk about [why we fail in investment] and how we can succeed.
1. Desperate Understanding in Uncertainty
When Russia invaded Ukraine, many expected commodity prices to skyrocket. So, many invested in oil. But afterward, oil prices actually fell. Why does this happen? We desperately try to understand in uncertain situations. The urge to control increases under stress. When these emotions rise, we are prone to making the worst decisions as investors. Therefore, it’s important to suppress emotions and view the market calmly.
2. Following Others’ Opinions
When investing, we often follow others’ opinions. We all want to be contrarian investors, but that’s not the case. We see the market itself as public opinion and try to confirm our own opinions. Our assessment of “good” and “bad” investments changes with market movements. So, we need to trust our own judgment and not be swayed by others’ opinions.
3. Not Considering Information Already Priced In
The market moves much faster than we think. When an upcoming recession is already priced in, we are still waiting for data. Moving late like this causes us to miss good opportunities. Especially when investing in thematic stocks with innovative technology or know-how, prices are often already high. Therefore, we must stay one step ahead of the market.
4. Deceiving Ourselves
We tend to forget our mistakes and exaggerate our successes. To succeed in investing, we must accept uncertainty and endure market turbulence. However, relying on intuition makes us see non-existent causes and effects, ultimately deceiving ourselves. To truly succeed in investment, we need the courage to trust our judgment and acknowledge past mistakes.
Approaching with Reason, Not Emotion
To succeed in investing, we must approach it with reason, not emotion. We should not rely on intuition, but instead, analyze data coldly and trust our judgment. Honestly evaluate your investment journey, endure uncertainty, and achieve successful investing.