Personality matters when it comes to investing. That’s because our personalities are infused into everything we do, but how we do it, and how he feel about doing it.
Investors can and (often) do learn from their experiences. Our outlooks change over time. But at our core, we remain who we are.
Understanding “who we are” and investing confidently based on that identity is the key to long term success.
MPI uses a proprietary Investing Personality Assessment based on the Five Factor Model of Personality to address this vital question of investor identity.
One personality trait, Spontaneity, has a profound effect on investing style and is particularly relevant today.
Question; which describes you best:
A) When you go on vacation, you like to plan out each day. You put things in your schedule. You make your dinner reservations with lots of time to spare.
B) You like to take it easy. You have a general sense of what you want to do to play it by ear. You wake up, eat breakfast and see what you feel like doing next.
If the answer is B you are most likely Spontaneous (if it’s A you are likely “Conscientious”, its polar opposite).
All personality traits are double edge swords, wonderful in some circumstances, a nightmare in others.
People who rate high in Spontaneity are more likely to be flexible and adaptable. They tend to be laid back and are comfortable playing situations by ear.
Spontaneous people are also less likely to make a plan, value that plan or stick to it. They are more distractable, and more likely to get sucked into the dreaded vortex of “Short-term Perspective” (where emotions rule and fortunes are lost) paying greater credence to the events of the moments, and losing sight of the big picture.
Do you know some investors like that?
Markets (like this one) with powerful short-term swings can wreak havoc on the portfolios of people who rate high in Spontaneity, often driving them out of their best laid plans.
MarketPsych Insights’ assessment screens for this trait and provides practical steps to manage and remedy the vulnerabilities that accompany it.
Contact us firstname.lastname@example.org for more information or a free demo.
And, hey... let's be careful out there.
Frank Murtha, Ph.D.comments powered by Disqus