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Daily Archives: September 30, 2010

A Surprising Source of Investment Stress

September 30, 2010
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A Surprising Source of Investment Stress

I remember reading an article on trading psychology a few years ago that researched which of four scenarios was the least stressful after an initial purchase of a stock—a quick, big loss; a gradual, slight decline; a gradual, slight rise; or a quick surge higher. While most people would think that either of the latter two scenarios would cause the least stress—after all, the trader would have a profit in each case—it turns out that the second scenario (a gradual, tame decline) is actually the least stressful.  Why?  Because, after making the commitment, a small decline requires no action—the...

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