GREED JAR
DREAMS OF AVARICE
The world of investing is binary.
For every winner there is a loser. The wealth is transferred from the reckless to the prudent, active to the passive and clueless to the knowledgeable.
As your investments grow and you become more confident, remember and be aware of the historical financial crashes caused above all by greed.
From 1637: Tulip mania (Dutch: tulpenmanie) was a period during the Dutch Golden Age when contract prices for some bulbs of the recently introduced and fashionable tulip reached extraordinarily high levels, and then dramatically collapsed in February 1637.
To 2009: The Great Recession refers to the economic downturn from 2007 to 2009 after the bursting of the U.S. housing bubble and the global financial crisis. The Great Recession was the most severe global synchronous economic recession in the world since the Great Depression of the 1930s.
DARK SIDE
As Yoda says so eloquently in Star Wars:
Fear leads to anger. Anger leads to hatred. Hatred leads to suffering. Suffering leads to the Dark Side.
Fear and greed can cause investors to take action that otherwise in normal circumstances would seem strange and odd.
So control your fear, you must!
VAULTING AMBITION THAT OVERLEAPS ITSELF AND FALLS ON THE OTHER
Shakespeare's Macbeth warns us about unmitigated greed and ambition.
All these warnings are just to ensure that while we must keep our goals aspirational, there is danger in trying to reach for the sun too quickly - we all know the Icarus story.
THE CNBC EFFECT
You are most likely to make an error of judgement when you see a headline like this:
CNBC 09:50 : Stocks close lower on Friday, extending sell off for worst week since June for S&P 500 and Nasdaq
In the greater scheme of things, it does not matter.
Ignore it.
SUMMARY
A large portion of JarInv is dedicated to ensure that you understand the psychology behind investing more so than the actual investing process itself.
We are sometimes our worst enemy when we do our best to damage our long term goals without being aware of it.
Investing is easy - keeping greed and hubris away is the real challenge.