The 7 psychological qualities of the investor in the stock market

As you may have seen in many movies, the psychological profile of the investor in the stock market is shown as that of a person greedy, dehumanized and who only acts for her own interest... Although this is usually the stereotype, nothing is further from the reality.

In real life, We observe that investors can have very different psychological qualities, which contribute in a more important way than we think in making investment decisions.

In the following article you will be able to discover the relationship between psychology and investing through Through the analysis of the main psychological qualities that characterize investors in bag.

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The relationship between economics and psychology

The stock market is about economics, but it has a very close link with psychology. The market is the reflection of the interactions between millions of people, who make investment decisions based on their feelings and emotions.

Those more savvy investors know that markets go up when investors are involved in a feeling of euphoria, and fall sharply when investors are gripped by fear and panic. These factors make the good investor not only a specialist in technical issues related to the present and the future of companies, but also an acute analyst on the psychological climate in each moment. And it is that this climate has a very direct impact on the revaluation or depreciation of certain companies and markets.

Personal and psychological qualities involved in investing

To understand this whole process, Next we will talk about the psychological characteristics that most influence long-term investment, with the aim of understanding which are the variables that most affect the investor when it comes to managing their own money.

1. Ambition

Ambition is one of the fundamental qualities of the investor in the stock market. When we invest, we do so with the aim of maximizing the profitability of our savings, whether in the short, medium or long term.

This same quality is what makes us investigate and analyze different markets and companies to detect those excellent businesses that are listed at low prices. To be an investor you have to know how to optimize time and resources. Thanks to ambition we will be able to set ourselves quantifiable objectives to gradually improve our results.

2. Planning

Planning helps us to develop our own investment strategy, it will be very useful for us to know how we should act at all times in the financial markets.

The investment plan describes all those rules that our investments will follow, from the market in which we operate, the risk we assume per operation, the indicators we use, or the percentage of money we invest in each company.

3. Adaptability

Faced with an environment as changing as the current one, the investor must have a great capacity to adapt to detect new trends, markets growing, or possible bubbles that may end up affecting his investments, as in the financial and real estate crisis of the year 2007.

The ability to adapt is something that we can learn with our own experience through the different situations that we have experienced in the markets. But we can also learn through reading, analyzing the historical events that have changed the course of markets, such as the crash of 1929, the oil crisis of the 1980s, or the dotcom bubble in the year 2000.

4. Discipline

The discipline of the investor depends on several factors, among which we find the discipline in our investment strategy and the discipline in savings. The discipline in our strategy consists of complying with the rules and guidelines set out in our investment plan.

On the other hand, the discipline of saving consists of setting aside a certain percentage of our salary each month to allocate it to investment. Thanks to discipline in these two areas, we will be able to generate good assets over time.

5. Patience

Patience is not only the mother of science, it is also the mother of long-term investing. In today's society we are used to demanding immediate results in order to quickly meet our expectations.

However, in investment things work somewhat differently. Long-term investing isn't like the 100-meter dash, it's more like a marathon in the that you must be patient, endure inclement weather and exhaustion to be able to cross the line of goal.

Resilience is the capacity that people have to face situations of stress and pressure. In the markets we find ourselves with this type of situation every day, and it is essential to have a good emotional balance to get up every time our emotions and insecurities us they hit.

During moments of crisis is when we must be most resilient. Although our investments are experiencing heavy losses, it is in this type of situation that the market offers us greater investment opportunities, which will offer us excellent returns when the storm has past.

7. continuous improvement

Continuous improvement is a quality that allows us to enhance the six previous qualities day after day, for it is important to work on our weak points so that our psychological qualities are more robust.

There is always room for improvement in everything, and if we manage to improve every day in the way of planning more efficiently, in the discipline of our plan of investment, adaptability to new environments, or to be more patient in certain market situations, we will be able to improve notably as investors. Even more so when the economic system, technology and agents that influence trends are factors whose complexity is rapidly increasing.

The balance between technical and psychological skills

In order to obtain good results in the investments that we carry out, it is essential to adequately combine our technical skills with our psychological preparation.

A person who has excellent technical preparation but does not know how to control her emotions at the time of investing will lose money in the stock market consistently, since he will make investment decisions influenced by greed, fear, panic, or euphoria.

So that this problem does not affect us negatively, it is highly recommended to train, first of all, in all those investment techniques that allows us to operate safely and reasonably, and work on the psychological part from the moment we start investing with money real.

Bibliographic references:

• Massé, Pierre (1963). The choice of investments. Sagittarius.
• Thorp, Edward (2010). Kelly Capital Growth Investment Criterion. World Scientific.