Relishing the thrills of "playing" the market, but seeing too many
stock trades go sour; believing that things will turn around after that
one good trade; hiding losses from loved ones--these are all
characteristics of the market gambler.
Gamblers are looking to be loved by fate. "If I can magically make
a trade come through, it demonstrates that I am the favored one," they
think. Fate takes on the guise of a parent: indulgent when the gambler
wins, punishing when the gambler loses.
Gambling is a serious matter because it inevitably grows more
intense and can become an addiction. The gambler operates on hunches, and
bets that certain outcomes will occur within a specific time frame. But
even in favorable markets, gamblers often lose because they take extreme
risks and don't cover those risks sufficiently. I've never known a market
gambler who came out ahead in the long run, although many can remember
some great trades.
Gamblers need to learn how to steer a more emotionally balanced
course in the market. Thrill-seeking, their emotional objective, must be
eliminated entirely, not simply reduced. First, a gambler must convert
his or her trading account (an account with a broker that allows the
investor to buy and sell options on stocks in very short periods of time)
into a true investment account. The more transactions a person makes, the
more a broker cams, so sometimes a broker will encourage such a client to
keep on trading. If that's the case, the solution is to get another
broker who can focus on more long-range investments.
The gambler should construct a portfolio in such a way as to make
it as difficult or expensive to alter as possible. The harder it is to
cash in stocks or funds, the better. Investments that make portfolio
changes difficult include variable annuities, real estate, and load
mutual funds (funds with a significant initial investment fee).
When a gambler stops trading for the thrill of it, he or she may
encounter troubling feelings of loss, because this means giving up
grandiose fantasies of fortune and the self-aggrandizement that
accompanies such fantasies. The gambler may also feel deprived, because
gambling on the market has occupied a great deal of his or her emotional
energy. The answer for these investors is to find other challenges that
offer controlled risks, such as reaming to sail, ski, or even fly an
airplane.
Sometimes, a gambling investment style can become a gambling
addiction--an insatiable urge to bet on the market. In this case, one
valuable resource is the self-help group Gamblers Anonymous; call (213)
386-8789. A state medical or psychiatric association may also be able to
refer you to a local therapist who specializes in treating gambling
disorders.
The real thrill in investing is having a portfolio that performs
dependably. Despite what some people believe about the market, it's
closer to a certainty than to a gamble.
INHERITANCE INSECURITY
Inheriting money has the same emotional impact as winning the
lottery--in fantasy, it's great; in reality, it can be fraught with
problems. Inheritors often suffer from grief, confusion, guilt,
embarrassment, and helplessness--feelings that make it difficult to
invest the money or to make necessary changes in a portfolio they've
inherited. The more ambivalent or embattled the relationship with the
deceased, and the more the inheritor wanted the money, the more guilty he
or she is likely to feel. If a person was left more money than his or her
siblings, or believes they have been favored unfairly by the deceased,
inhibitions about handling the money may well develop.
One way to assuage some of this guilt is to put labor into
investing, or to work at finding a money manager and to devote effort to
understanding the choices the manager is making. A primary responsibility
of someone who inherits substantial wealth is to conserve the money and
pass it along. Viewing oneself as a caretaker, rather than as a
profiteer, can help to relieve guilt.
The inheritance can also engender a sense of shame because in our
society money that is acquired without work has a certain stigma attached
to it. This shame can cause the inheritor to feel that he or she should
give the money away or "do good" with it. There is certainly nothing
wrong with doing social good with one's money, but this decision should
be made on the basis of personally-held values, not on feelings of shame
or irrational impulses.
Inheritors sometimes want to make socially conscious
investments--for example, buying stock in companies that are friendly to
the environment, have good labor relations, and promote women equally.
But remember that taking a socially conscious approach does not mean that
one can find total "purity," since there are gray areas in the social
records of most companies. There are mutual funds that won't invest in
industries such as tobacco, alcoholic beverages, and gambling, and which
seek out socially responsible companies. An inheritor can also set up a
charitable trust with the help of an attorney and donate regularly to
worthwhile charities, a surer path to "doing good" than socially
conscious investing.
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gambling,
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inheritance,
Investing,
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simple matter
