Avoid investing while aroused

[Dustin Ruhl]

When thinking of the best investors compared to Star Trek, Vulcan's would make the best investors compared to Mr. Spock who would be more of a irrational decision maker. There are many emotions that can affect a humans decision. It can be simply the day of the week, the feeling you have at the moment, or as simple as watching a movie to make up your mind. The moods that humans have affect the decisions we make and can impact the world. People's emotional decisions can add fuel to the economy. A study was conducted in which they had the subject watch 3 different movie clips. These movie clips evoked different emotions such as: scary, exciting, and calming. After the videos were viewed by the subjects, they entered into a game in which they had to trade a fake asset for real money they had been given for the study. The people who watched the exciting video witnessed assets that prices increased faster and were at a higher peak than those who watch the other videos. Those who watched a calming video witnessed their asset prices in case the least. Excitement can increase and make assets grow faster. It is very important to make investing decisions before you experience great emotions such as extreme highs and lows.

Key Takeaways:

Researchers determined that people's investing strategy is influenced by their emotions. The mood people are in can have implications on the worldwide investment market.

Growing asset bubbles can cause excitement leading to an emotional high that will make people take higher investment risks against their better judgement.

In the study participants watched an exciting, calm, or scary movie clip before a trading game. The ones who watched the exciting clip were willing to take higher risks.

"Make all of your important investing decisions before your emotions kick in."

Read more: http://www.bankrate.com/financing/investing/avoid-investing-while-aroused/