💣Are you impulsive or cautious? What makes for a good investor? 💣

in investing •  2 months ago

Investing is usually seen as something only impulsive people do. It is seen as a risky business, just like gambling. Well, it isn't. Are you cautious and afraid to invest? You just might be the best possible fit for an investor.

Impulsiveness leads to loss in investing

Many cautious people avoid investing and impulsive people flock to the field and loose their money. Impulsiveness isn't a good fit for investing. Don't get me wrong, you can be successful in investing even if you're impulsive, but you need to learn not to be. Contrary to common believe, investing has nothing to do with gambling at least if you do it correctly. Gambling is of course a possibility, like it is for any part of life. You can apply for a job you don't know how to do and get hired, but it doesn't mean that you know what you're doing. Likewise, you can invest in businesses without knowing what you're doing and make a profit, but that doesn't mean you're doing it correctly.

If I had to guess, I'd say most people who invest are people who are impulsive. When impulsive people bring their impulsiveness to the market, that causes illogical price swings. This can be seen both in the stockmarket as well as in the cryptocurrency market. But that is fine. As a cautious person, I can't but enjoy the profits that impulsive people bestow upon me.

Cautiousness is the secret ingredient to successful investing

In contrast to impulsiveness, cautious people avoid investing. They are scared to loose their money like the impulsive people that act based on their gut feeling. What they don't realize is that they are like shark in an ocean of pray.

An impulsive shark might attack the wrong pray and hurt itself, a cautious shark will first make sure that attacking the pray is a wise decision. Not only does the cautious shark get the best pray, the impulsive sharks are killed by pray that protects itself, leaving the cautious shark with less competition. This example highlights the way cautiousness is actually a real asset when it comes to investing.

Cautious people know that they can't just throw their money at anything and expect to gain. They will even question their move when others throw their money at the hot stock or cryptocurrency. Cautious people do their research before investing. They also do their research before selling. They don't sell when the price is up, because they know that it might go further up.

When it comes to selling your investments, the best time to sell a good investment is never. When you sell your good investment it stops being an investment. It comes down to when you need money, sell your investment. Good investments don't need to be sold and that is why cautious people don't need to worry about their investment when they've done their research.

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