Managing your psychology as an investor

I noticed an interesting parallel across a couple of recent experiences: dealing with the ups and downs that comes with the risk of making any investment decisions.

Imagine four scenarios:

  • you decided to hop onto the cryptocurrencies bandwagon when your investing app drops you a notification that there seems to be significant decrease on the two most established coins. (short term)
  • you decided to open up a small business selling food. this is your first experience running a business. you don’t know what to expect but are curious to find out and get your hands dirty. (medium term)
  • you have fallen out of love with your career but you don’t hate it either. it’s now merely an intellectually stimulating job that still makes you feel useful. you don’t want to lose the organisational capital you’ve built over the years. (medium term)
  • you decided to get into a relationship with someone you’ve known for some time on the basis that it makes a lot of sense on paper. there’s no clear upside but there’s no perceivable immediate downside either. (long term)

In all of these scenarios, you’re invested in some form or the other, in different timeframe, and different scale of impact.

Shortly, I’ll share a couple of thought patterns I notice I have when thinking about these different situations, and what I think might help untangle, unstuck, or manage your own psychology if you’re ever in a similar situation.

Let’s start from the basics: investing is basically deciding on three things:

  1. Assessing and seizing opportunities: which one to choose out of all available options. [1]
  2. Budget: how much do you want to spend / trade for the ownership
  3. Timing: when to pull the trigger and for how long are you prepared to stick with it

And I’ve observed these three thought patterns that I seem to share across the different scenarios

First thought pattern: FOMO

  • kapan lagi, kan dah lama ngomong pingin buka usaha. pingin masuk kripto.

Second pattern: blind optimism

  • pas rugi enggan cut loss, pingin nunggu sampe at least deket2 titik BEP baru lepas. pas udah nggak rugi, berasa sayang kalo dilepas, “kan momentumnya udah naik. mgkn skrg bakal uptrend, hold dulu deh siapa tau untung, mari pantau dan maksimalkan. apa gw nambah porsinya?”.
  • jalan 6 bulan, masih rugi2 tipis, terus diusahakan tetap bertahan. mikirnya “liat bulan depan, mungkin keadaan membaik. corona kayaknya dah mau kelar. mgkn org belum banyak yg tau / nyobain. jgn patah semangat. terus lanjut di-promote”.

Third pattern: ownership bias

  • pas profit 500rb seneng dan optimis setengah mati, berasa “tuh kan, bener pilihan gw”. pas rugi 5jt “gpp gpp selow tenang tenang sabar”. ini mental judi bukan sih?

Now what?

I know that these thought patterns are not helpful or even the optimal to have to manage my own psychology if I want to invest successfully. That’s why I decided to try and clarify my own thoughts here.

the value of anything is the amount of life you’re willing to trade for it. so how valuable is your investment now? not only monetarily, but also all the life you’re trading for it? is it actually a gain or a loss?


  • jangan impulsif dan FOMO. tapi kita nggak bisa ngukur dan nebak pasti titik terdalam maupun tertinggi, jadi kalo udah memutuskan utk masuk ya masuk aja. siap2 kalem aja kalo lalu turun. jangan dipelototin terus, nggak akan ngaruh.
  • ini kenapa selalu disarankan utk berinvestasi menggunakan duit dingin. jadi kalopun dia naik turun gak menentu 6 bulan pun, nggak akan mengganggu kehidupan sehari2 / bikin jantungan atau kelaparan.
  • have a clear idea of things you will gain no matter what the outcome is. if you cannot find anything you will enjoy or appreciate during the process, then don’t even start.
  • have a clear criteria for cut loss or take profit

  1. Two approaches to #1 in financial realm:
    1. Portfolio approach: spreading the risk out (mutual funds, ETF), betting on a cluster to succeed or fail
    2. Stock picking approach: taking a blind shot with all intel that you could gather right now but know that you’re putting your egg on this one basket

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