Rational Advisor

Great, a nice article on things I’ve been harping on in Wall Street Journal

Here’s the video on the article

http://link.brightcove.com/services/link/bcpid452319854/bctid1676282639

And here’s the article and link

http://online.wsj.com/article/SB121642720591866951.html

Here are the main oints from the article, to read the whole article hit the link above

How to Control Your Fears In a Fearsome Market
July 19, 2008; Page B1

Merely reading the words “market crash” in this sentence can instantaneously jack up your pulse and your blood pressure, the output of your sweat glands and the tension in your muscles.

The countless people who bailed out of the market in the horrifying plunge of October 2002 missed out on the generous returns of 2003 through 2007, when stocks returned 12.8% annually. The same is likely to be true of those who cut and run in today’s turbulent market.

Fortunately, you can train your brain to stay calm when the markets are gripped by panic.

Here are some ways you can control your fears.

Reappraise. Forget what you paid for that stock or fund; instead, imagine it was a gift. Now that it is priced, say, 20% more cheaply than in December, should you want to return the gift? Or should you buy more while it is on sale? (If rethinking a fallen price this way doesn’t make you feel better, maybe you should sell.)

Because fear is as contagious as the flu, quarantine yourself from anyone who obsesses over the momentary twitching of the Dow. Tear yourself away from the computer or television.

Intelligent investors act out of patience and courage, not panic.

ultimately it’s all about being rational in an irrational world

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