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It is interesting to watch this process of thought and emotion in oneself when there is a sudden and violent drop in a stock. Or a protracted correction in the market for days or weeks at a time. |
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It is equally interesting (and much more enjoyable) to witness the fantasies which arise as our stocks are making money. All kinds of fantasies of how we might spend our profits may fleetingly pass through our minds as we calculate how much money we are making. Clearly, one of the psychological payoffs to online trading is the time spent lost in this delicious reverie. But here is an example of a fantasy which goes the other way. |
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A Roller Coaster Ride through Hell |
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One morning in the summer of 1999 I sat in front of my monitor and watched in near shock as one of my holdings, CMGI, a very volatile Internet stock, dropped nine points in an hour and a half in early trading. |
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I was getting pretty squirmy in my chair, wondering how far down it would go. I had decided when I bought this stock that, because of its volatility, it was best to view it as a trading stock, not a long-term hold. It was moving down too fast. |
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To add to my torture, I opened my portfolio evaluator window which showed me, down tick by down tick, exactly how much money I was losing as it plummeted. The loss was mounting up. Shock was replaced by anger. I knew this stock moved sharply but this was disturbing. |
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In the course of this ride down, I began to berate myself for getting involved with such a wild stock. I had traded this stock a few times over the months and had done pretty well, holding it for a few days or weeks at a time. Each time I had made a healthy profit. But right now I couldn't think about how much I had made taking advantage of this very same volatility. |
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It felt like I was going through a miniversion of financial hell. This fantasy hell is an easy state to get into when you are watching a plunging stock very closely like this. I had negative fleeting images, negative thoughts, imagined catastrophic losses, along with and an industrial strength measure of fear. |
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After an hour and a hall, lo and behold, the stock reaches some kind of bottom, and slowly begins climbing back up. And keeps climbing. Even faster than it had been brought down, it was now bouncing back up. I couldn't believe what I was seeing. There was no explanation for the quick bounce. |
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