You’ll Never Grow Rich Taking A Profit

“I made up my mind to be wise and play carefully, conservatively. Everybody knew that the way to do that was to take profits and buy back your stocks on reactions. And that is precisely what I did, or rather what I tried to do…..They say you never grow broke taking profits. No, you don't. But neither do you grow rich taking a four point profit in a bull market.”

Jessie Livermore, Reminiscences of a Stock Operator

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Regret

Behavioural Biases (4): Regret

If you’ve ever done something and then regretted it you’re in the fine company of the rest of the human race. If you’ve never regretted anything then you’re probably a sociopath and need to stop attacking people with spatulas and get a nice quiet hobby instead. Something like misdirecting people into buying stupid stocks on internet bulletin boards should do nicely.

If you are fairly normal, however, you’ll be aware that regret is an unpleasant and queasy feeling which you’d generally rather avoid if at all possible. As ever, when it comes to finance, obeying the urgings of your intestines comes at a cost. In investment it pays it to pays to regret nothing: although it’s certainly true that pride comes before a fall in your portfolio value.

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