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Check Your Emotions at the Door

By Motley Fool Staff - Apr 21, 2016 at 3:04PM

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Advice from David Gardner on keeping a cool head when passions rule in investing

Getting emotional about your money is natural, and there's nothing wrong in enjoying the highs and feeling the lows when investing. 

In this clip from Rule Breaker Investing, Motley Fool co-founder David Gardner explains the differences in the types of emotions that investors allow to rule their decisions when it comes to the stock market. He also explains which emotions can be beneficial with investing, and the importance of checking at the door the ones that'll hurt you.

A transcript follows the video.

This podcast was recorded on Oct. 28, 2015. 

David Gardner: No. 5: Check your emotions at the door. I go back and forth a lot on emotion in investing. This principle, from our article I like and support, that's why I'm talking about it here, checking your emotions at the door, it doesn't mean that emotion is bad in investing. I want to be clear that I think things like being passionate about the companies you're investing in, being excited if a stock doubles, or if you get your first Spiffy-Pop, these are wonderful emotions, and I am all about positivity and bringing emotion that is positive to as many of our endeavors as possible. And most of the most psychologically healthy, in my experience, and productive people in our world are positive people. And that's an emotion.

But the type of emotion we're talking about here that you should check at the door are reactive emotions. Usually, they come about as negative reactions to things that have just happened and cause us to make poor decisions looking backwards at what just happened. We've talked about this on this podcast. I know I'm going to do it again in the future. But don't invest with a rearview mirror. So much of the world is looking backwards, as Jack Bogle reminds us with his "rowboat syndrome" -- too many of us, we're paddling forward, but we're looking backwards, and when something goes wrong, we tend to overreact. And we start to do things like, "You know what? I shouldn't be investing at all," or these kinds of things that I've covered. 

So check your emotions at the door. Really important. But also remember that there are some great emotions that you should be bringing to bear with your investing.

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