International Man: What personal and psychological blind spots and limitations should a speculator be wary of?
Doug Casey: There is no question that your biggest enemy in the markets is your own psychology.
Everybody suffers from fear when the market is down and greed when the market is up. It’s a matter of getting out of your own head and trying to be objective.
The market doesn’t care what you paid for a stock, bond, or piece of real estate. If you’re underwater, your emotions are wired to tell you to hold on until you can “get out even.” That’s how small losses turn into big losses. If you have a profit, your emotions may tell you to grab it and run before it disappears, which precludes you from ever hitting a long-ball homer or getting a 10–1 shot. You have to be aware of your emotions. They’re not your friends.