{"id":9425,"date":"2015-03-06T11:51:53","date_gmt":"2015-03-06T19:51:53","guid":{"rendered":"http:\/\/www.marketriders.com\/investing\/?p=9425"},"modified":"2016-12-21T07:27:47","modified_gmt":"2016-12-21T15:27:47","slug":"stocks-high-emotions-will-cost","status":"publish","type":"post","link":"https:\/\/www.marketriders.com\/investing\/stocks-high-emotions-will-cost\/","title":{"rendered":"Stocks Too High? Emotions Will Cost You"},"content":{"rendered":"

You might recently have seen headlines about the NASDAQ. The tech-centric stock market has broken through its previous all-time high, set back in the dot-com days.<\/p>\n

It soon fell right back under the record, of course, but it is likely to advance more than retreat over the coming weeks, and the headlines will fade. The same thing happened with the Dow and the S&P 500 not long ago.<\/p>\n

We pay a lot of attention to false positives in the financial media, events that supposedly prove that assets are overvalued or undervalued. It can be very easy to forget that behind all the certainty of the news headlines is 100% conjecture<\/a> \u2014 plain old guessing.<\/p>\n

\"stocks<\/a><\/p>\n

Yes, if enough people pile on\u00a0during up years, stocks\u00a0can\u00a0correct lower. It’s just human behavior to want more of\u00a0a good thing.<\/p>\n

But it’s also human behavior to fear losses, what behavioral science researchers call “loss aversion.” They do complex psychological experiments to test these ideas, but the bottom line is easy to understand: We make irrational, costly choices when presented with the risk of losing money<\/a>.<\/p>\n

So fundamental\u00a0is that urge that some studies show that our fear of losing money is twice as strong as our desire to make it. The result often shows up as\u00a0selling perfectly good investments on the mere hint that something might go wrong.<\/p>\n

We feel better staying out, and we discount the obvious and concurrent risk: That markets could\u00a0instead go up \u2014 as they did in 2013, for instance \u2014 and you miss the gains by sitting on the sidelines in cash.<\/p>\n

Staying invested is a big deal. The only way to compound your money<\/a>\u00a0is to realize gains and to reinvest those gains.<\/p>\n

For most investors, that means steadily reinvesting dividends and gains made from rebalancing<\/a>, that is, from programmatically selling off some of the “winners” in a portfolio and dedicating those gains to the relative “losers” in the same portfolio.<\/p>\n

Stocks too high fix<\/h2>\n

Rebalancing tests\u00a0your loss-aversion brain circuitry in a major way. You are being asked to get rid of a portion of\u00a0a stock that has treated you well and to give those resources to a stock or other investment that has not \u2014 at least on paper.<\/p>\n

Take a step back. By rebalancing, what you’re really doing is selling high and buying low. Ask any 10-year-old how to make money and the logical conclusion will come back to you as “buy low and sell high.” Rebalancing flips the order, but it’s the same transaction.<\/p>\n

If you truly fear a major market meltdown is in the near future, well, that’s a sign that you are invested in ways that are too risky for your own mental well-being. The solution there is to revamp your portfolio to have a more conservative tilt<\/a>.<\/p>\n

That move alone will change your life in terms of your relationship with money. You’ll sleep better for sure. Playing chicken with the markets will change your life too, but not in the way you would hope.<\/p>\n","protected":false},"excerpt":{"rendered":"

You might recently have seen headlines about the NASDAQ. The tech-centric stock market has broken through its previous all-time high, set back in the dot-com days. It soon fell right … Read more →<\/span><\/a><\/p>\n","protected":false},"author":8,"featured_media":9431,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_wp_rev_ctl_limit":""},"categories":[3],"tags":[43,54],"yoast_head":"\nStocks Too High? Emotions Will Cost You | MarketRiders<\/title>\n<meta name=\"description\" content=\"If you truly fear a stocks too high market meltdown is in the near future, well, that's a sign that you probably are invested in ways that are too risky.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.marketriders.com\/investing\/stocks-high-emotions-will-cost\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Stocks Too High? Emotions Will Cost You | MarketRiders\" \/>\n<meta name=\"twitter:description\" content=\"If you truly fear a stocks too high market meltdown is in the near future, well, that's a sign that you probably are invested in ways that are too risky.\" \/>\n<meta name=\"twitter:image\" content=\"https:\/\/www.marketriders.com\/investing\/wp-content\/uploads\/2015\/03\/6sided_dice.jpg\" \/>\n<meta name=\"twitter:creator\" content=\"@marketriders\" \/>\n<meta name=\"twitter:site\" content=\"@marketriders\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"MarketRiders\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.marketriders.com\/investing\/stocks-high-emotions-will-cost\/\",\"url\":\"https:\/\/www.marketriders.com\/investing\/stocks-high-emotions-will-cost\/\",\"name\":\"Stocks Too High? Emotions Will Cost You | MarketRiders\",\"isPartOf\":{\"@id\":\"https:\/\/www.marketriders.com\/investing\/#website\"},\"datePublished\":\"2015-03-06T19:51:53+00:00\",\"dateModified\":\"2016-12-21T15:27:47+00:00\",\"author\":{\"@id\":\"https:\/\/www.marketriders.com\/investing\/#\/schema\/person\/f2be262f5c0f3ed5ad50d6c40640ba8c\"},\"description\":\"If you truly fear a stocks too high market meltdown is in the near future, well, that's a sign that you probably are invested in ways that are too risky.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.marketriders.com\/investing\/stocks-high-emotions-will-cost\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.marketriders.com\/investing\/stocks-high-emotions-will-cost\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.marketriders.com\/investing\/stocks-high-emotions-will-cost\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.marketriders.com\/investing\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Stocks Too High? Emotions Will Cost You\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.marketriders.com\/investing\/#website\",\"url\":\"https:\/\/www.marketriders.com\/investing\/\",\"name\":\"MarketRiders.com\",\"description\":\"How To Become A Better Investor\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.marketriders.com\/investing\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.marketriders.com\/investing\/#\/schema\/person\/f2be262f5c0f3ed5ad50d6c40640ba8c\",\"name\":\"MarketRiders\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.marketriders.com\/investing\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/8e06113f594828daaf313d283544d566?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/8e06113f594828daaf313d283544d566?s=96&d=mm&r=g\",\"caption\":\"MarketRiders\"},\"sameAs\":[\"https:\/\/www.marketriders.com\"],\"url\":\"https:\/\/www.marketriders.com\/investing\/author\/support\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Stocks Too High? Emotions Will Cost You | MarketRiders","description":"If you truly fear a stocks too high market meltdown is in the near future, well, that's a sign that you probably are invested in ways that are too risky.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.marketriders.com\/investing\/stocks-high-emotions-will-cost\/","twitter_card":"summary_large_image","twitter_title":"Stocks Too High? Emotions Will Cost You | MarketRiders","twitter_description":"If you truly fear a stocks too high market meltdown is in the near future, well, that's a sign that you probably are invested in ways that are too risky.","twitter_image":"https:\/\/www.marketriders.com\/investing\/wp-content\/uploads\/2015\/03\/6sided_dice.jpg","twitter_creator":"@marketriders","twitter_site":"@marketriders","twitter_misc":{"Written by":"MarketRiders","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.marketriders.com\/investing\/stocks-high-emotions-will-cost\/","url":"https:\/\/www.marketriders.com\/investing\/stocks-high-emotions-will-cost\/","name":"Stocks Too High? Emotions Will Cost You | MarketRiders","isPartOf":{"@id":"https:\/\/www.marketriders.com\/investing\/#website"},"datePublished":"2015-03-06T19:51:53+00:00","dateModified":"2016-12-21T15:27:47+00:00","author":{"@id":"https:\/\/www.marketriders.com\/investing\/#\/schema\/person\/f2be262f5c0f3ed5ad50d6c40640ba8c"},"description":"If you truly fear a stocks too high market meltdown is in the near future, well, that's a sign that you probably are invested in ways that are too risky.","breadcrumb":{"@id":"https:\/\/www.marketriders.com\/investing\/stocks-high-emotions-will-cost\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.marketriders.com\/investing\/stocks-high-emotions-will-cost\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.marketriders.com\/investing\/stocks-high-emotions-will-cost\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.marketriders.com\/investing\/"},{"@type":"ListItem","position":2,"name":"Stocks Too High? Emotions Will Cost You"}]},{"@type":"WebSite","@id":"https:\/\/www.marketriders.com\/investing\/#website","url":"https:\/\/www.marketriders.com\/investing\/","name":"MarketRiders.com","description":"How To Become A Better Investor","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.marketriders.com\/investing\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.marketriders.com\/investing\/#\/schema\/person\/f2be262f5c0f3ed5ad50d6c40640ba8c","name":"MarketRiders","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.marketriders.com\/investing\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/8e06113f594828daaf313d283544d566?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/8e06113f594828daaf313d283544d566?s=96&d=mm&r=g","caption":"MarketRiders"},"sameAs":["https:\/\/www.marketriders.com"],"url":"https:\/\/www.marketriders.com\/investing\/author\/support\/"}]}},"_links":{"self":[{"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/posts\/9425"}],"collection":[{"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/comments?post=9425"}],"version-history":[{"count":5,"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/posts\/9425\/revisions"}],"predecessor-version":[{"id":9481,"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/posts\/9425\/revisions\/9481"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/media\/9431"}],"wp:attachment":[{"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/media?parent=9425"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/categories?post=9425"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.marketriders.com\/investing\/wp-json\/wp\/v2\/tags?post=9425"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}