3. DETACH EMOTIONS FROM $

It’s natural for humans to have emotions tied to $, since there’s a story behind the blood, sweat, tears & sacrifices that were made in order to generate that $. However, when it comes to the world of investing, the feeling of happiness, sadness, or any factor that stirs your emotions to $, need to be KILLED from day 1.

If your emotions move in correlation with the value of your wealth, this journey will be extremely difficult mentally & physically, bad decisions will most likely result, and will eventually eat you alive. It would probably be better if you stick with the safe 9-5, which I know a majority of people do not want to do for the rest of their lives.

Let’s first take this simple example to get a deeper understanding of your emotions related to $.

Ideally you try doing this in real life, but for now, let’s imagine you are doing this for real.

Put $20 on the table and ask yourself these questions: What is this $ amount to you? How did you get it? What did you sacrifice? What can it do for you? What sort of emotions do you feel?

Now let’s put a larger $ amount on the table and ask yourself the same questions.

- Put $100 on the table.

- Then $1,000 on the table.

- Then $5,000 on the table.

- Then $10,000 on the table.

- Then $100,000 on the table.

- Then $1,000,000 on the table.

- Then $5,000,000 on the table.

How did your feelings change as the $ amount increased?

You’ll see that your inner self start to get excited, worried, anxious, while it created imaginations, disbelief, and questions.

But did the emotions of the cash on the table change as the $ amount got larger? NO. The $20 all the way to the $5,000,000 never changed its feelings or viewed you or anything any differently as the $ amount changed.

It’s EXTREMELY important to keep your emotions on the sidelines when it comes to deploying your $, so your decisions are always first principle based on the company, product, CEO, management team, customers, and fundamentals, rather than allowing your emotions to sway you in making poor decisions due to a temporary change in the valuation of your investments.

Investing is NEVER a smooth ride and during the ride up & down, human emotions are usually what results in an investor’s downfall.

This needs to be prevented at all costs.

At the core of investing, emotions MUST remain as far away from you as possible, otherwise it could cause you to do the following.

#1 you will get scared that your investment is losing value & you will sell at the low.

OR

#2 you will get excited that your investment has gained value & you will sell at a temporary high.

When your $ is behind the best of the best, once in a lifetime type generational company, in each of the situations above, you should actually be doing the OPPOSITE of what your emotions want you to do.

For #1, you should be nibbling, easing in, increasing your position on the low and more aggressively buying the lower the valuation gets, rather than selling.

For #2, you should simply be sitting on your hands and smiling (one of the most underestimated skills in investing). You could also continue to invest little by little in a disciplined manner ($X or Y% of income per month), bc the the long-term growth trajectory is still in tact, just not as aggressively as #1. Imagine selling AAPL, GOOG, AMZN at the so called "top" 5-8 years ago when everyone said it was here?

The ONLY market place where humans don't like cheap prices is the stock market, because of EMOTIONS.

What do people do when their stock goes down 50-75%? They cry, sell, and run away from the opportunity, bc their emotions form dark clouds around their head, telling them all of their hard earned $ is going to dissipate to $0.

What do people do when they find their first home, in a premium location, and becomes 50-75% cheaper? People believe they are getting a deal of a lifetime and buy.

This is how your mindset needs to framed, before you begin dipping your toes into the world of investing.

Investing is often reverse psychology, so repeat after me: RED DAYS ARE BUY DAYS, GREEN DAYS ARE CHILL DAYS.

Remember, human emotions will be your worst enemy when it comes to investing, so make sure it stays on the sidelines the moment you put your $ to work.

Let me know on Twitter if this helped change your perspective and what you are doing to DETACH YOUR EMOTIONS FROM $!

-TESLACONOMICS