The Conscious Investor – Compliments of Pawleys

Imagine you are enjoying your morning coffee on your beach house porch, reading the Wall Street Journal. As you flip through the sections, the headline grabs you that your beloved pharmaceutical company has failed a critical step in its newest blockbuster drug trial. You own several hundred shares, thus a huge knot forms in your stomach. You decide to abandon your morning beach view, head back to the kitchen, and flip on CNBC to check on the market. Right in your face is the breaking news that one of your biggest stock holdings, a well-known industrial company, has had an accident at one of its manufacturing facilities, and the stock has plunged dramatically. Now the knot in your stomach starts to take over your entire body. The next breaking story involves the bankruptcy of a municipal healthcare project located in a state completely across the country, but since you hold several municipal bonds in your portfolio, you start to wonder if they will encounter trouble as well. Now investing does not feel like very much fun.

The world is filled with random events that are well beyond your control, and if you have spent time investing, you know that economic and market news can be the source of euphoria or disaster. Where investors go wrong, however, is by allowing their emotional response to these events to cause their minds to go into a tailspin. The thoughts that swirl around in your head can become consuming and distract you from your original purpose.

Quiet your mind, grasshopper. We cannot change the randomness of events, or the action of the stock market. What we can control is our response to those events and work towards quieting our minds. The markets may seem bumpy at times, but the economy and markets actually behave in very consistent ways. The inconsistency comes in the form of how investors respond. If you have a solid, systematic process that focuses on the selection of high-quality stocks and bonds, you will be better positioned to respond like a cool cucumber in times of turmoil. An objective, systematic investment plan and research process is critical, but if you have done your homework all that remains is to keep the faith and belief in your work.

Controlling your emotions is one of the single most important factors in becoming a successful investor. Conscious investing with a quiet mind will take you to the next level and enable you to enjoy the wonderful simple things in life, such as the view of your favorite beach.

© 2013 Pawleys Investment Advisors, LLC. All rights reserved.

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