In Investing, Emotion Stronger than Fact

By | March 30, 2014

invesmentRegret and pride become the benchmark for stock investors, according to a recent study. This nullifies the assumption that the objective facts into the back of people to invest in stocks. And this phenomenon continues to occur even though it is known that emotional factors could plunge into bankruptcy or loss.

Brad Barber, a lecturer Graduate School of Management at the University of California stated, after selling its shares, investors are usually upset while watching the stock price has risen steadily and especially because of remorse for having sold it.

“They expect that disappointment and regret will increase in intensity if they do not buy a stock than buy it back. So investors are more likely to repurchase stocks previously sold for a profit that is redeemable under the price at which they sell,” he said as reported by the Futurity .org.

Barber and his team have conducted a number of studies over the years about the stock market and investors. The analysis implies that investors often make decisions based on emotions such as regret, disappointment, satisfaction and even proud. His findings were published in the Journal of Marketing Research.