The Key to Avoiding This Common Investing Pitfall

In today's Masters Series, adapted from the October 17 issue of Empire Financial Daily, Enrique explains why letting emotions drive your investing decisions could ruin your portfolio... discusses why it's such a common error... and reveals how you can prevent yourself from making this critical mistake... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Master Series] Editor's note: Don't be your own worst enemy... In a volatile market like the one we're in today, you can't let your emotions get in the way. If you want to avoid huge losses in this bear market, you must go into every investment with a plan and stick to it... That's why Enrique Abeyta – an editor at our corporate affiliate Empire Financial Research – says it's crucial for investors to remain disciplined and avoid making knee-jerk decisions based on losses. In today's Masters Series, adapted from the October 17 issue of Empire Financial Daily, Enrique explains why letting emotions drive your investing decisions could ruin your portfolio... discusses why it's such a common error... and reveals how you can prevent yourself from making this critical mistake... --------------------------------------------------------------- The Key to Avoiding This Common Investing Pitfall By Enrique Abeyta, editor, Empire Financial Research One of the biggest arguments in all of investing is whether the markets are "efficient" or not... The idea of an "efficient market" is that all the available information out there is "priced in" to stock prices. This means that investors have no real way to gain an advantage. But instinctively, we know this is not true. All you need to do is watch a stock drop 5% on an analyst downgrade or a tweet from the CEO, and the logic that this is all priced in doesn't stand up. The major reason why markets are not efficient is because, ultimately, human beings make the vast majority of investment decisions. As much as we would like to say that these decision-makers are rational and unemotional, the reality is that hundreds of thousands of years of genetic programming still govern our actions. These are responses that were developed to keep the human race alive... and they worked! It's hard to override that with a couple years of business school. The most powerful of these responses which impacts trading is called the "negativity bias"... This is a condition in which negative events have a greater impact on our brains than positive ones. Research on human brain activity has shown that negative stimuli generate three to 12 times more physical (electrical) response than positive stimuli. One famous experiment by economist and psychologist Daniel Kahneman had participants imagine either losing or gaining $50. Even though the amount was the same, the emotional response of those losing the money was larger. The negativity felt around losing something is much larger than the advantage of gaining something – even if it's the same amount at stake. This makes sense... For ancient humans, a good meal from a fresh kill would trigger a positive response and a full stomach, but falling off a cliff would trigger death and no more responses. Earlier in human history, paying attention to negative stimuli was literally a matter of life and death. But today, it gets in the way of good investing... One of the most common issues is to overemphasize the "negative" factors and miss out on great opportunities. My favorite example of this is not buying a world-class business because of the valuation or some recent short-term disappointment... --------------------------------------------------------------- Recommended Link: ['I Warned You': A 75-Basis-Point Hike and the Next BIG Crash]( Dan Ferris recently came forward with a dire warning that a devastating market crash – far greater than anything we've seen this year – could already be underway... And he says that you need to ignore any of the so-called "experts" hoping for a Fed "pivot" with a fourth-quarter rally. This, RIGHT NOW, is the time to protect your financial life. And it couldn't be more urgent. [Click here for the full story... including Dan's exact game plan](. --------------------------------------------------------------- In fact, our portfolio at Empire Elite Trader is full of these kinds of opportunities. We look for great businesses with long histories of operational success and great stock-price performance that have stumbled because of something that is immaterial to the value of the business. Investors who have sold these stocks have overemphasized the negative. In many positions, we see companies that have beaten expectations on every metric but one, and the stocks tumble. This is a prime example of negativity bias. Another problem is when we dwell on negative events... even after they have passed. I've fallen prey to this even in my own investing, where I would have a portfolio of 30 stocks but find myself spending 90% of my focus on the one or two losers in that group. Those stocks ended up being doubly dangerous because not only were they losing me money, but they also prevented me from properly focusing on the rest of the portfolio. This resulted in missed opportunities and – equally important – made me miserable. Don't discount the psychological impact that "losers" can have on your investing beyond just the money you've lost. For the past three years, my Empire Elite Trader readers have booked an 87% success rate in the stock market... Our strategy has nothing to do with long-term, buy-and-hold investing... risky options or cryptocurrencies... and you don't have to stay near your computer all day waiting for a constant barrage of trade alerts. I always look forward to hearing about the success that my readers are having by following my trading advice, like Victor C., who says... Enrique's recommendations have been amazing! My trading account is 20% up in only 3 months. And Mike W., who told me... Enrique's "Elite Trader" has made me a lot of money! When I first signed up for Empire Financial Research as a lifetime member, little did I know how much the program would keep getting better as new services were added. It keeps paying for itself over and over! Thanks, Whitney and Enrique! You've made a "little guy" in the world of stocks and trading a very happy man. And John M., who says... I am increasing the size of my investments because Enrique's suggestions are carefully selected and I could have made a lot more money had I made bigger investments in my prior and current positions. New positions are going to be larger now that I am more comfortable with the concept of trading with carefully constructed stops to limit the downside and have much more confidence in the validity of Enrique's recommendations. Today, the stock market may look like a mess, but it's fertile hunting ground for traders who know what they're doing. Regards, Enrique Abeyta --------------------------------------------------------------- Editor's note: Enrique has made money during every single crisis, including the dot-com crash, the 2008 financial crisis, and more. And today is no different... He designed a powerful new system that has an 87% success rate. It allows you to make thousands of dollars per week by getting key information faster than the public. And Enrique recently held a demo to show you exactly how this strategy works. [Click here to get the details](... --------------------------------------------------------------- Recommended Link: [PLEASE STOP BUYING THE DIP!]( This is the worst year for buying the dip since 1931. Instead, you could make thousands of dollars a week right now by getting key information FASTER than the public on 6,000 different stocks. [See a demo here (87% success rate)](. --------------------------------------------------------------- You have received this e-mail as part of your subscription to Stansberry Digest. If you no longer want to receive e-mails from Stansberry Digest [click here](. Published by Stansberry Research. You’re receiving this e-mail at {EMAIL}. Stansberry Research welcomes comments or suggestions at feedback@stansberryresearch.com. This address is for feedback only. 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