#27 - Why Most Investors Act Like Toddlers
Hey everyone, Kirk here again at Option Alpha. On today’s daily call, we’re going to talk about why most investors actually act like toddlers. This actually came out of just (I don’t know) being a parent. I often relate investing a lot to parenting. I think actually, parenting has taught me a lot about being patient, being calm the long haul basically because you can’t get them back obviously and a lot more stuff about investing in life obviously by being a parent, especially if two girls I guess right now, I’ll learn even more when they become teenagers. But I do think that most investors, most traditional investors (we often probably find ourselves in this mode a lot) act like toddlers. The reason is because we overreact and for some reason, when it comes to money in the markets, we can’t control our emotions. It’s like my kids. My two girls are young. I have one who’s almost four now and then a toddler who’s like 18 months. Our toddler, our youngest, Anna, she has a really tough time right now controlling her emotions which is part of just her developmental process and as her father, I have to be there to help her understand what anger is, what being mad is, what being happy is and coaching her through that process as much as possible. But she just has a really tough time. These emotions come over her just like waves and there’s something she could do about it. I mean, she’s not deliberately trying to be mean or malicious or anything. It’s just how it happens or reacts. I feel like people often and traders in particular when it comes to their account and their money, they have a bad trade and it’s just like this overwhelming wave of emotions that come over them and even so when they have a good trade. They have a good trade that works out really well and it’s just this overwhelming emotion of like, “Man, that was awesome!” and they feel like now they’re invincible which is also the opposite end of the spectrum of feeling like your crap doesn’t stink basically. I think that we have to learn how to control our emotions on both sides of the tape when we’re losing and also when we’re winning. Act like we’ve been there before. More so when we’re losing that if we have a losing trade to not give up, to not let the emotions take the best of us. At the end of the day, we’re all adults now. We’re not kids, we’re not toddlers. We should act like adults when it comes to investing money, realizing that there is a potential to lose money, but also that without risking money, we don’t have any potential to make money. But hopefully as your guys’ coach or mentor, however you want to see me in doing this podcast and doing Option Alpha, I’m here and I’m trying to act like the person who’s been there and done that before for the last eight, almost nine years now in doing this because I want to show you guys that if we have a losing trade, I’m still going to be here, that if we have a winning trade, I’m still going to be here. I’m not going to let my emotions get the best of me and just quit. I’m going to stay consistent, stay persistent in keeping up with it. Hopefully this thought process helps you out. If you’re a parent, you can definitely relate to this today, but I do feel like most people who get started in this really act like toddlers and they should grow up and act like adults and really try to take control of their emotions or at least recognize when they’re getting the best of them when it comes to trades. Hopefully you guys enjoyed this. Until next time, happy trading!
