What is Investment Psychology—To Investors 100 Years from Now

The words of market speculator Jesse Livermore have always stayed with me.

“There is nothing new on Wall Street. What happens today has happened before and will happen again. This is because human nature does not change.”

When I first read these words, I paused for a moment.

The world of the market always appears with a new face.
New systems.
New financial products.
New news.
New investment apps.
New thematic stocks.
New investment methods.

The numbers on the screen and the speed at which information flows are completely different from the past.

If you open your smartphone, you can see markets around the world instantly.
If you look at social media, someone's profits and someone's losses flow in with almost no time lag.
News is updated one after another, and exchange rates, interest rates, and stock prices all seem to be moving without rest.

However, how much has the human heart that watches those screens actually changed?

I don't want to lose money.
I want my assets to grow more.
If I don't sell now, my profits might disappear.
If I wait a little longer, it might return to my purchase price.
Everyone else is doing well, and I feel like I'm falling behind.

I believe those movements of the heart have surely existed since long ago.
And I believe they will likely remain in the future as well.

The reason I came to want to write about “investment psychology”is probably because of this feeling.

What is happening in the market always looks new.
But the human heart swaying deep inside might, unexpectedly, be repeating the same movements as it has since long ago.

If so, I want to write down those movements of the heart.
For those who are reading this text now.
And perhaps for an investor I have yet to meet, who might be reading this somewhere 100 years from now.

That is the feeling I have within me.

1. The market always appears with a new face

When investing, there are times when you feel, “Isn't this time different from before?”

When new technology emerges.
When there is a major change in financial policy.
When unexpected news breaks.
When the entire market rises significantly.
Or when it falls significantly.

Each time, the market appears with a different face.

Recently, investment has become more accessible than before due to NISA.
You can easily place orders on your smartphone, invest small amounts, and diversify your investments into stocks around the world.

Information is also available much faster than in the past.
Corporate earnings, statements by key figures, exchange rate movements, and reactions in overseas markets.
All of these can be checked immediately.

It has become convenient.
The choices have increased.
I think the gateway to investing has become much wider for individual investors.

However, just because the entry point has become wider does not mean that your heart will stop wavering.

Rather, it may be that with the increase in information, hesitation has also increased.
It may be that because it has become easier to see the performance of others, it has also become easier to compare yourself to them.
With the development of computers and smartphones, it has become easier to buy and sell, which may have made it easier to take unnecessary actions.

Tools evolve.
Systems change.
The investment environment also changes.

Even so, the one who is there is a human being.

A human who feels anxiety.
A human who feels greed.
A human who feels regret.
A human who holds hope.
And a human who sometimes views the market in a way that is convenient for themselves.

I myself have experienced such movements of the heart many times while continuing to invest.

2. Even so, the human heart wavers in the same way

When you continue to invest for a long time, you encounter the same kinds of emotions over and over again.

Fear of loss.
Anxiety that unrealized gains will disappear.
Regret when the price rises further after you have locked in profits.
Frustration when the price drops after you have continued to hold.
Impatience when you see a stock you couldn't buy going up.
A slightly unsettling feeling when you see the profits of others.

I believe all of these are emotions that naturally arise when you are investing.

I, too, remember the fear of loss well.

When unrealized losses grow, I start to hate opening my brokerage account.
Just looking at the numbers makes the blood drain from my face, and I get a sensation as if my stomach feels a bit heavy.

"Why did I buy at that time?"
"Why didn't I sell sooner?"
Such words repeat in my head over and over again.

On the other hand, there is a different kind of anxiety when unrealized gains are increasing.

Even though they should be increasing, I cannot settle down.
Even though I should be happy, I find myself thinking, "What if this disappears?"
Even though I haven't locked in the profits yet, I feel as if they have already become mine.

And sometimes, just by that unrealized gain decreasing a little, I feel as if I have lost something.

It is not only when you are losing money that your heart wavers.

Anxiety also arises when things are going well.
In fact, when things are going well, your judgment can sometimes become sloppy.

"Maybe I can take a little more."
"Maybe it will be fine this time."
"Maybe my method was correct."

When I start to think that way, there are times when something inside me is leaning a little too far forward.

In investing, knowledge is necessary.
The ability to read financial statements, the ability to look at interest rates, and the ability to consider exchange rates and the economy are also important.

But there are times when that alone is not enough.

I know it intellectually.
I know that diversification is important.
I know that a long-term perspective is important.
I know that it is better not to make unnecessary trades.

Even so, my heart still wavers.

And if I make decisions without noticing that wavering, I sometimes wonder later, "Why did I make that trade?"

Perhaps reading one's own reactions is just as important as reading the market.

Ever since I started thinking that way, I have become drawn to investment psychology.

3. What is Investment Psychology?

To me, investment psychology is not about erasing emotions.
It is about observing the habits of your own mind so that you are not pulled too far by your emotions.

It is not about blaming yourself for being afraid.
It is not about denying yourself for feeling greedy.
It is not about labeling yourself a bad investor for feeling regret.

Rather,

"What am I reacting to right now?"
"Is this judgment based on facts?"
"Or am I being pushed by anxiety or impatience?"

I believe it is a tool for pausing like that.

It is not a bad thing for your emotions to be stirred by the market.
In fact, it is natural for emotions to be stirred.

Since you have your precious money in the market, you will feel anxious if it goes down.
If the assets you have spent a long time growing decrease, your heart will be troubled.
If you see others making large profits, your own investments may seem insufficient.

If you try to erase all of that, it will probably become painful.

You cannot eliminate emotions.
At least, I cannot.

Therefore, instead of erasing them, observe them.
Instead of suppressing them, take a little distance.
Notice the reactions happening within you, even if it is after the fact.

That is why I use the term investment psychology.

4. What I am watching in the market

When you are investing, there are many numbers you should look at.

Stock prices.
Indices.
Exchange rates.
Interest rates.
Earnings reports.
Dividends.
Profit margins.
Sales.
Market expectations.

All of them are important.

But I want to keep an eye on the movements of my own heart just as much.

The version of me that feels, in a falling market, 'Was everything I did wrong?'
The version of me that thinks, in a rising market, 'Won't this just keep growing?'
The version of me that wants to protect my unrealized gains when they increase.
The version of me that wants to pretend my unrealized losses don't exist when they grow.
The version of me that thinks I'm finding peace of mind by following the news, but is actually just increasing my anxiety.
The version of me that is about to make filling my NISA quota the goal before I even realize it.
The version of me that is about to lose my own pace after seeing someone else's profits on social media.

These movements of the heart are not displayed on the digital screen.

Your brokerage account shows your valuation.
It shows your profit and loss.
It also shows your holdings, dividends, and buying power.

But it does not display your impatience.
It does not display your regrets either.
The feelings of being swayed by comparisons and the sensation of greed growing do not appear on the screen.

That is why I believe we have no choice but to look for them ourselves.

While writing about investing, I may have actually been checking in on my own emotional reactions many times.

The pain of cutting losses.
The regret after taking profits.
The wavering when seeing others' profits.
The anxiety from following the news too closely.
The overconfidence when things are going well.
The guilt of doing nothing.

These are all small movements of the heart that occur during investing.

However, those small movements of the heart can change your trading decisions.
They can gradually pull you away from your original goals.

That is why, when I look at the market, I try to look not only at the numbers but also at my own reactions.

5. You cannot become an investor whose heart never wavers

When I first started investing, I might have wanted to become an 'investor whose heart never wavers' somewhere deep down.

Don't panic when it drops.
Don't get carried away when it rises.
Don't compare yourself to others.
Don't be swayed by the news.
Be able to make decisions calmly.

I think about how easy it would be if I could become that kind of investor.

But now, I have a slightly different way of thinking.

I believe I cannot become an investor whose heart never wavers.
At the very least, I cannot become one completely.

I feel anxious when it drops significantly.
I feel happy when it rises significantly.
I feel regret if it rises after I sell.
I feel a bit disappointed if a stock I didn't buy goes up.

I think that is fine.

The problem is not that you waver.
The problem is making decisions without realizing that you are wavering.

Convincing yourself it's a calm decision when you are actually anxious.
Convincing yourself it's a rational decision when you are actually driven by greed.
Convincing yourself it's a new investment decision when you are only trying to recover from regret.

I think that is when investing becomes a bit precarious.

That is why what I aim for is not an investor whose heart never wavers.

It is an investor who can return to center after their heart has wavered.

Return to your purpose.
Return to your time horizon.
Return to your risk tolerance.
Return to the rules you decided on at the beginning.
And return to look at what you are reacting to right now.

I believe investment psychology is the place to return to for that purpose.

6. To Investors 100 Years from Now

I am writing this now for the people who are reading this text.

People who are watching the market in the same way, in the same era.
People who are swayed by the numbers in their brokerage accounts.
People who feel anxious when they see the news, or feel a little relieved when they see unrealized gains.
People who want to continue investing, but sometimes feel mentally exhausted.

I am writing for those people.

But just a little bit, I am also writing for investors 100 years from now.

I do not know what form investing will take 100 years from now.

The brokerage account screens we use now might not exist anymore.
The mechanism of stocks might also have taken a different form than it does today.
Currencies, trading methods, and how information is received might all be completely different.

Even so, I think investors 100 years from now will surely have their hearts waver somewhere, too.

They will want to avoid losses.
They will not want to miss out on profits.
They will feel impatient when comparing themselves to others.
They will regret not buying sooner.
They will wish they had waited a little longer.
They will feel anxious when watching the news.
They will believe in themselves a little too much when things are going well.

I think such movements of the heart will remain, even as they change their form.

If this text remains until 100 years from now.
And if an unseen investor finds this text somewhere on the vast internet.

"Oh, people 100 years ago were worried about the same kinds of things."

If they think that, I would be a little happy.

For that person, my stock selection, asset amount, or the market environment of that era might hold almost no meaning.
However, the feeling of fearing loss, the feeling of not wanting to lose profit, and the heart that wavers when comparing itself to others, I think those might resonate just a little bit.

Investors 100 years ago surely wavered, too.
We, too, are wavering now.
And someone 100 years from now will surely waver as well.

That is precisely why I believe there is meaning in writing about investment psychology.

Market predictions become outdated as time passes.
News, numbers, and themes will all eventually become things of the past.

However, the movements of the human heart may linger just a little longer.

I find the fascination of writing about investment psychology in that very fact.

7. Conclusion

What is investment psychology?

To me, it is not a special technique for winning in the market.
It is not a way to prevent every failure.
It is not meant to turn you into a person who can erase emotions and always make the right decisions.

Instead, it is a way to keep from losing sight of yourself while you are swayed by the market.

To notice when you are afraid, because you are afraid.
To notice when greed arises, because greed has arisen.
To look at whether you are trying to recover from regrets when you are feeling regretful.
To return to your own purpose when you feel impatient from comparing yourself to others.

Repeating those small confirmations is what investment psychology means to me.

I believe the market will continue to change.
Systems, products, and the speed of information may all become different from what they are now.

Even so, people's hearts will surely be swayed again.

That is why I want to write about investment psychology.

For those who are reading this text now.
And for someone, somewhere, 100 years from now, who might be facing the market in the same way.

There is no need to become an investor whose heart is never swayed.
It is enough to have a place to return to and look at your own heart when it is swayed.

That is what I believe.

■ Related notes
・📌 [Site Map] For First-Time Visitors: Neru's Note Guide to Facing Investment Mentality [Investment x Psychology]

・Self-Introduction: "Investment x Psychology — I strive for investing that makes emotions my ally"