Volatility and Emotions

Jul 12 13:07 2019 Print This Article

This is part of a client letter I wrote when running MurphyMorris Money Management about 20 years ago.  The message is the same today.  Market volatility has an emotional cost.  It causes investors to make irrational decisions that are usually based on either fear or greed.  Volatility also carries a steeper financial cost than most realize.  Consider the two investments in Table A below.  The one on the left (Boring Investment) is a dull, boring, plodding investment.  It never hits a home run, but never strikes out either.  The investment on the right (Exciting Investment) has lots of sizzle and excitement.  It takes your breath away in both directions.

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StockCharts.com was founded in 1999 by Chip Anderson, a 10-year veteran of Microsoft. StockCharts.com is a website that provides online investors with high-quality financial charts for making better investing decisions. StockCharts.com is focused on Technical Analysis - the study of price history via charts. They provide award-winning analysis tools, market commentary from respected analysts like John Murphy and Martin Pring, and a huge collection of educational resources that can help anyone become a better, more informed investor.


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