Psychology of Investment: Childish Mentality

Get Rid of it Before Investing

As time passes, a child becomes a mature person, but many of them never think that they still have a child in their mind that influences their decisions. A childish mindset is one of the biggest obstacles to a good investment for many people. They want to get rich quickly but after a few incidents, they leave the market forever. One such constraint that I found very common among many investors is; They want to buy stocks in large quantities;

·         For them, quantity matters a lot and they least bother about quality.

·         Their rationale is very simple, among them if only one will perform them I will get enough return on my investment.

·         But they forget that there are no "ifs" in the field of investing, there are only "facts".

·         And all performance reflects only facts in any types of investment. 

Buying in Large Quantity

Child Behaviour: Children like to have a large number of toffees and chocolates in their pockets. They are not satisfied by taking only one or two pieces. Even they are unable to eat but they want to keep it in their pocket and they feel very happy keeping it in their pocket.

Adult Behaviour: While adults do not take interest in such types of activities.

Many investors have a similar mindset when considering buying a stock. They are always interested in ultra-cheap penny stocks or shares that they can hoard in bulk quantities without properly understanding the fundamentals of the company.

First, they look at the price and mentally calculate the quantity they can buy, and if the quantity comes down, they ignore all the fundamentals, all the stock advice, not even ready to pay attention. What matters most for them is quantity. The same childish mindset that wants to have more toffees and chocolates in their pockets.

I have noticed that many investors have only those stocks in their portfolios that they can accumulate large amounts of. Even though all the fundamentals of these stocks are gone, they retain it for years. Holding a big quantity of stocks in their portfolio satisfying the childish mentality that they have a large number of toffies and chocolates in their pockets although there is no meaning of that. 

(Excerpt from my book "Psychology and Investment")