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The Case for Keeping Your Cool

Posted by: Today's Tip Contributor on June 9, 2010

In more than 20 years working in financial services, I’ve seen one simple truth play out again and again: Emotions and money don’t mix.

Why? Because emotions often drive us to make the worst possible decisions with our money, leading us to buy high and sell low. The last two years on Wall Street further illustrate the kind of wreckage that can occur as the heat of the moment drives investors to become their own worst enemy.

Emotional decisions can be toxic for entrepreneurs as well. Despite calls to "go with your gut," business decisions based on emotion—especially when you are angry or competing for survival—can lead to disaster.

So, before investing all of your resources on a hunch or firing a promising employee for making a costly mistake, cool your temper or curb your enthusiasm. If necessary, sleep on it and remember the wisdom of an old Russian proverb: Trust, but verify. Review the plan you have and weigh the consequences of your decision before you act. The extra time might mean the difference between a smart strategic move and a disastrous mistake that could ruin your business.

Alex Potts
President and CEO
Loring Ward Group
San Jose

Reader Comments

Prof P.Madhu Sudana Rao,Ethiopia

June 10, 2010 10:30 PM

There are a million different ways you can feel, but scientists have classified human emotions into a few basics that everyone can recognize: joy, acceptance, fear, surprise, sadness, disgust, anger, and anticipation. But four major emotions which give us the most trouble: anger, fear, anxiety, and depression.One has to keep cool and respond to situations especially dealing with finance matters.Because decision taken with these characters in mind ,it is bound to be a wrong one.One major wrong finance decision is enough to suffer for the entire life of a person.

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