Author Topic: How do you control emotion when your stock goes down  (Read 6705 times)


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Re: How do you control emotion when your stock goes down
« Reply #30 on: October 24, 2018, 04:02:33 AM »
I wouldn’t call the last few weeks a big downdraft. Downdrafts as I define it would be 20% downdrafts in broad indices. I personally embrace downdrafts as I mostly keep cash round to average down at lower prices. Other than that it’s best to escape the news cycle and look at the market in broader terms, but also watch out for risks in your portfolio haven’t been fully assessed.
To be a realist, one has to believe in miracles.


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Re: How do you control emotion when your stock goes down
« Reply #31 on: November 12, 2018, 01:31:53 PM »
Get away from your screen and don't look at your P&L frequently.  The less you see the share prices, the less it affects you.


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Re: How do you control emotion when your stock goes down
« Reply #32 on: November 16, 2018, 07:51:34 AM »
As a youth, I played baseball competitively, and I was pretty good until the competition got better in high school. Prior to high school, I threw fits on the field as a pitcher when my infielders bobbled what I considered easy-to-field balls. When I got to high school, during the spring, when I did that, my coach pulled me behind the dugout, and told me that I would never play baseball for this team if I pulled stunts like that ever again.

That episode made me change really fast, and along the journey to controlling my emotions in high school, I stumbled upon Marcus Aurelius' "Meditations". I found it to be enormously helpful in putting events in my life into perspective, and training myself to not get too high or too low. It's just simple Stoicism, but it works for me, and not just for stocks.

I'm not claiming to be perfect. I still resent my former boss for some things he said and didn't follow through on, but overall it works better than what I was doing before.


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Re: How do you control emotion when your stock goes down
« Reply #33 on: January 10, 2019, 06:20:11 PM »
I feel like if the stock goes down and I dont want to buy more, I consider selling at least some of the position.  Either I dont know the thesis as well as I should or the thesis has changed/is changing.  Either way is a good reason to sell.  When stocks go up, if I size them correctly I try to sell more once the stock settles and no longer is going parabolic, to keep position size similar to original portfolio.   


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Re: How do you control emotion when your stock goes down
« Reply #34 on: January 19, 2019, 07:54:57 PM »
How do you control your emotion when the price of one your top holding stock or the market value of your portfolio drop?

Mr. Buffett always values temperament and one’s ability to control emotions for investment success more than intelligent or knowledge.

“The most important quality for an investor is temperament, not intellect. You don’t need tons of IQ in this business. You don’t have to be able to play three-dimensional bridge. You need a temperament that derives great pleasure neither from being with the crowd nor against the crowd. You know you’re right, not because of the position of others but because your facts and your reasoning are right.”

“I am rational. Plenty of people have higher IQs and plenty of people work more hours, but I am rational about things. You have to be able to control yourself; you can’t let your emotions get in the way of your mind.”

As value investors, we always understand the price volatility is not risk, the permanent lose of capital is. However, no matter how well I understand and remember these concepts, I still experience emotional swings when one of my top holding or the market drops significantly. During this situation, my subconscious may take over and initiate the automatic response.
The brain of different person may wire differently. The brains of great value investors, such as Mr. Buffett, Munger, Klarman etc may be wired in such a way that they experience little emotional anguish when their stock or portfolio goes down.  But, I believe most people experience emotional swing when their stocks price goes down a lot or up a lot.

How can one train one’s mind to respond differently? If this is a personality trait that cannot change, great value investors benefit by their genetics.

If one cannot control his emotion, he may make wrong buy/sell decisions and mastery of investment knowledge or IQ does not help.

I recommend you read my post here:

For the past 9 years, I've been trying to fix my emotions but I gave up eventually. I am the kind of person who simply cannot buy a stock, see it go down 50% and remain calm. Therefore I am not suitable for value investing.