Separate Your Emotions From Your Decisions: Ron Johnson & Jon Corzine Lesson

EmotionsOur longstanding readers and clients know that we are big fans of removing your emotions from the decision making process, in life and in the market. This is yet another lesson of what it is paramount for investors to remain objective, analyze the facts and always listen to what the market is saying (not someone’s opinion). 

Love To Fall in Love:

Humans love to fall in love.  It is very easy for investors to fall in love with an idea or a person. Rational investors know that it is very important to separate your emotions from your decisions (Note: most investors, and people, do not behave rationally).

Learn To See, Don’t Be Blind:

Doing this offers many benefits one of which allows you to remain objective and focus on the facts, not fiction (ex: the hope that one man will save a company even though his strategy for that company has not been tested yet). Another favorable benefit is that it allows you to do date your investments, not marry them. This allows you to sell your investment if it is not acting well(falls x% below your purchase price). The old adage says love is blind. Hopefully, investors can learn to “see” and in the future do not fall in love with an idea or person. This way they can avoid losing all their money in MF Global or over 50% in JCP!

Irrational Behavior:

Just as a quick example to illustrate this point- JCP’s Board choose to bring Ullman back- which makes no sense. There are over 7 billion people in the world, they really could not find a better person? 

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