The Relationship Of Emotions And Investment Essay

1036 WordsOct 10, 20165 Pages
Introduction This paper is provided as an analysis between the relationship of emotions and investment. Specifically, there will be an emphasis on the feelings, self-control, and how our decision making play a role in investing. This paper will also include a detailed summary of the emotional states of misattribution bias, positive and negative emotions, pessimism and optimism. Lastly, this paper will contain an explanation of how this behavior influences investing, and how to alleviate this comportment through self-control. Emotional states, feelings Our emotions can control how we think and how we go about specific situations. This can be about work, personal, or more specifically investment decisions. Essentially, an individual who is in a good mood will feel more lenient in their financial decisions, and act more loosely with their finances in regards to investments. Individual who are in a good mood as opposed to those in a bad mood have a more positive outlook on their future. However, this is not always a good thing. The individuals who embrace investments with a more positive outlook are more likely to take on riskier investments, thus opening the door to more susceptible losses. This is known as misattribution bias, and can lead individual investors astray during the course of their initial investments (Nofsinger, J., 2014, pp. 108-113). Needless to say, the influence of emotions and feelings have an impact on the investment decisions of individuals. A
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