December magic … the brain’s wonder … and how to defeat emotional investing
December has settled in, and it seems like the world has transformed.
Everyday sights are now lined with twinkling lights.
The scent of pine trees fills homes, shopping malls and even office buildings.
Kitchens are stocked with cookies – maybe one of your favorites that you look forward to every year.
It’s amazing how the sights, sounds and smells of a season can transport you backwards in time. You probably remember just what your house looked like when you were young, the excitement of putting up the decorations, and the comforting aroma of your favorite treats baking in the kitchen.
The brain stores all this information and the related emotions and calls it up again easily. Suddenly, you’re thrown back into a different (hopefully happy) mood.
The brilliance of the human brain can’t be overstated. With it, we turn ordinary homes and shops into places of wonder. Human beings write symphonies, create mechanical marvels, and now we have even created real artificial intelligence.
An adult brain only weighs about three pounds and is 75% water, but it contains about 100 billion neurons – roughly the same number of stars in the Milky Way galaxy. Despite its compact size, its capacity to create music, art and inventions seems limitless.
Yet for all its marvelous gifts, the human brain is not always the best tool for stock picking and managing your portfolio.
As we all know, we’re too often ruled by our biases and emotions. All our analytical capabilities are worthless if we let those things sway our decision-making.
But there are ways to mitigate those impulses and make the most of your investing dollars.
Overcoming irrational investing
You don’t have to be a psychologist, sociologist or economist to understand that humans are emotional creatures. The field of behavioral finance examines the irrational behaviors that hurt our money management.
If you look back over your investing history, you can probably see, in retrospect, how your biases affected your decision-making.
Some of the more familiar biases include:
Overconfidence: In investing circles this is often referred to as “confusing a bull market with brains.” Overconfident investors refuse to believe their thinking is wrong, even when the market changes direction.
Loss Aversion: People fear losses more than anything else. This causes them to sell winners too soon or hold on to losers for too long, hoping they will rebound.
Crowd-seeking: The fear of missing out leads folks to pile into popular trades, creating bubbles and eventual crashes. Everyone who lived through the dot-com bubble and crash can relate.
And as trading stocks has become easier – you can trade stocks in seconds on your phone – the potential for an emotional decision to wreak havoc on portfolios has only increased.
Senior tech investing analyst Luke Lango knows this challenge well.
Luke is well-known for his ability to see the technology trends that are going to drive societal progress. His specialty is investing early in the companies that will thrive from that change.
Whether the technological advancement is self-driving cars, AI, quantum computing or the rise of cryptocurrencies, Luke has helped his subscribers grow their wealth as the tide of progress continues to surge forward.
And though technology is unemotional, technology investors are still just human beings with all the same emotional tendencies. Here’s Luke explaining how that reality affects the markets.
More so than any other time in history, the stock market is being driven by emotions. And markets driven by emotions like fear or greed are a breeding ground for volatility.
This observation resonates with buy-and-hold investors. One day everything seems to be going well in the market, and the next day chaos reigns.
You likely remember 2018, when on Christmas Eve, the S&P hit its low point on a 20% correction that had begun just months prior.
2018 S&P Market Plunge
Luke believes fear- and greed-driven “flash crashes” are only going to become more common.
That’s why he decided to develop a solution to help keep himself, and his subscribers, from having to endure these stomach-churning rides.
Luke’s new stock screening system
Luke hasn’t abandoned buy-and-hold investing. He specializes in finding the innovative companies that are developing the technology of tomorrow. Those are often smaller companies that need time to grow and mature. And in his various investment services, he still provides related buy-and-hold recommendations.
Over the shorter term, however, Luke wants to help his readers thrive in volatile market environments. But that requires overcoming those investment biases we highlighted a moment ago.
This is why Luke created a new, exclusive stock screener called Auspex that identifies the best fundamentally strong stocks with the technical indicators and positive sentiment needed to drive short-term gains. It’s a systems-based market approach that removes emotion, allowing impartial data to inform buy and sell decisions.
At its core, Auspex identifies the strongest stocks in the market. Each month, Luke runs it again, thereby continually making sure that investors are aligning their wealth with the current “best of the best,” not yesterday’s leaders who are now slipping (which too many investors would hold onto thanks to our biases).
After a year of development and rigorous back testing, Luke is ready to make the results widely available.
Luke has shared the system’s picks with his Inner Circle subscribers for the last five months, and it has beaten the market every month – even in November, as you can see in the chart below.
| Index | November Return |
| S&P | 5.73% |
| NASDAQ | 6.21% |
| DOW | 7.54% |
| Luke’s Auspex System | 8% |
Luke will explain why the markets are going to be more volatile than ever next year, how he developed his new Auspex screener, and how his subscribers can achieve market-beating gains while only spending about 10 minutes a month on their portfolios, and only trading five to 20 stocks at a time.
The event is free, and the results are impressive. You can sign up for the event by clicking right here.
The holidays can be a time of great joy and happy memories. With Luke’s powerful Auspex tool, you can create some financial joy and happy memories year-round!
Enjoy your weekend,
Luis Hernandez
Editor in Chief, InvestorPlace
