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What is investor’s confidence?

July 1, 2010

Your investor’s confidence has been tested last month. Apple shares reached $274 per share on June 18, 2010 and plunged to $254 per share on June 29, 2010. If you owned 1000 shares of Apple on June 18  you “lost” $20,000 11 days!  How do you feel about “losing” $1,818 per day for 11 days? If you own 10,000 shares of Apple, how do you feel about “losing” $18,1818.18 per day for 11 days? Here is how to evaluate your investor’s confidence:

1. Thinking: You did not think much about it, may be once or twice while checking your portfolio or chatting with friends, but the “plunge” did not occupy your thoughts. You knew that the plunge was a temporary market “correction” that had nothing to do with the quality of the Apple company or its products.

2. Feeling: You felt normal anxiety about it, maybe a bit disappointment that you didn’t sell at $274 on June 18, but the “plunge” did not create stress about your disappointment, or anxiety. You continue to feel optimistic about your investment in Apple shares in the long run.

3. Behavior: Your behavior as an investor has not changed. You didn’t buy Apple shares at $254. You didn’t sell Apple shares ate $254. The change wasn’t big enough. You did nothing.

4. Investor’s confidence: The natural ability to feel, think and  act effectively regarding the financial situation you are in. Investor’s confidence is a third of Self Confidence, which is awareness of  your fine skills in living based on information you have gathered about your achievements, your commitment to do things greater than your life, your desire to help people less fortunate than you, your experience of spirituality, and the “smoothness” or harmony of your relationships! Investor’s confidence cannot exist is vacuum. It is part and parcel of who you are. The worse thing an investor can do is to believe that he has financial confidence without experiencing the maturity of feeling, thinking and acting effectively about money!

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