Saying, “No” makes a two-year old feel powerful.
“No, no, No, no, no, no, NO!”
In a toddler’s world, this simple declaration is a decision that’s both finite and incredibly satisfying. It’s one of their first expressions of personal opinion. It’s empowering. Whether they understand what they’re saying or not, this simple statement is a self assertion that carries personal validation. Now hear this: I have a voice, and I matter. And that’s all that matters.
As adults, we attach all kinds of baggage to the word “No.” It’s negative. It implies conflict and disagreement with a situation or alternative. It makes us feel that when we say “No”… at least one side will be disappointed. It almost implies regret. In investing, it implies an opportunity cost.
A lot of adult investors could learn something from a two-year-old.
Sometimes you need to just say “No” and walk away. When it comes to limiting your personal investment liability, too few investors know when- or why- to say No. Setting effective account limits takes both intellectual and emotional IQ.
• Hard Limits: What do we mean by “hard limits?”. When you issue investment orders, you must understand the difference between market orders (the actual price as it fluctuates) and limit orders (the most you’re willing to pay or the least you’re willing to take). You have the power to say No in a very clear, black-and-white capacity. Understand the how transactions in the financial arena are completed and know your hard limits on each investment.
• Emotional Limits: How well do you know your own reasons for investing? Are you in the game for the big win and the emotional rush? Do you root for the underdogs and wait patiently for the long-term payout? Too many investors overlook the influence of their emotional boundaries on their investment activities. Some investors will ride a stock all the way to the bottom, knowing that if they say “No, no more” and cash out…that loss cannot be recouped. Other investors are drawn to the same type of stock—which ultimately turns out to be a loser– again and again. Some invest thinking that their support or their influence will change a stock for the better. We simply can’t ignore the influence of our emotions and our expectations on our investment choices. But, we do need to balance those emotions with a rationale for finite investing limits.
Two-year-olds make their very first attempt at setting personal boundaries by proclaiming again and again… No! They don’t always understand the impact or implication of their actions, but they feel powerful in having made a decision. Make a decision about your own level of risk tolerance and your specific expectations. A few boundaries are healthy, after all.
