Think Like the Great Investors: Make Better Decisions and Raise Your Investing to a New Level

Chapter 35

Blinded by fear

The emotional response to danger, known as fear, is vital to our survival. Those who are totally without fear are in great danger of self-destructing in numerous ways. Fear is also important in the stock market, but while it can protect us, it can also lead us into grievous error.

Loretta is a young woman walking home late at night. She takes a shortcut down a side street. No sooner is she in the side street than she catches sight of a group of youths coming toward her. She instantly recognises them as fitting the stereotype she has recently seen in the media as involved in attacks on young women.

Instantly Loretta’s entire body and mind are thrown into panic. She imagines being attacked by the group approaching her. Adrenaline pulses through her system, her heart thumps in her chest and every muscle is taut. Thinking only of escape, she turns and runs blindly away from the group and out onto a busy road. Cars that Loretta did not even see coming swerve to avoid her.

The next day, Mark comes back to his office after an all-morning meeting. He fires up the internet to check his investments. Most of his savings are invested in a mining exploration company that has fallen 10 per cent this morning. This is on top of a 20 per cent decline over the past month. He is gripped by an overwhelming fear of losing his savings.

In his mind, Mark sees the rest of ...