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and hopeful view of the future. While this certainly isn't a bad bias to have in the living of one's life, it can make for some rather tough adjustments when things do not turn out as rosy as expected. |
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Because they are thinking the future will be as good or better than the present, they may not take adequate precautions to protect themselves in times of major market corrections. Nor do they always think about saving for emergencies or financial reversals. |
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The gullibility of the optimist is based on the false and naïve belief that others will be as caring, thoughtful, and honest as they are. This makes them open for manipulation and exploitation by others through online bulletin boards, where optimists may follow stock tips given by people they don't know but are too quick to trust. |
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Camaraderie on the Boards |
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Repeated posting to online boards tends to make investors feel a camaraderie that leads to thinking they know people better than they actually do. In addition, the underlying desire to please others coupled with a tendency toward compliance may lead to blindly following tips and advice without exercising sufficient critical judgment. |
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The optimist is always in danger of overlooking other people's less-than-honorable intentions. When more aware of this basic bias, the optimist can learn to stay positive but try and eliminate the gullibility that tends to accompany this trading style. |
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This type is more common among senior investors as well as very young and naive investors who are susceptible to sales pitches, penny stock scams by telephone, and various other con games that revolve around gaining their trust and playing on the desire for quick and easy riches. |
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On the positive side, when the optimist becomes a more educated and sophisticated investor, he or she, given an "injection" of the gambler-disciplined trait, has a good attitude for the long haul should he or she try active trading. |
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They are not easily disappointed by day-to-day losses. They will not be the ones who fly into angry rages, shouting or pounding the desk, when a trade goes against them. They expect the next trade to go their way. They have learned to take short-term or long-term financial loss in stride. |
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This type of investor will be biased toward stocks always going higher, companies always improving their earnings, and the future |
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