1: rationality definition
2: rationality Investors
3: rational analysis
4: the key to being rational
Opening information:
Rational means being logical on every step from thought to action. Logical means reasonable decision-making using a fact-based analysis.
The analysis must be proved with evidence from point to point. Without a lack of proof or information couldn’t be rational.
This article contains information about what is rationality, how rational Investors work, and how to do rational analysis, it is key to being rational for Stock Investors.
1: rationality definition
Kane is a guy who is 23 years old, one of the strongest porn addicts.
Who enjoy using or watching the porn for nearly more than 8 years.
He started to consume porn when he was 15 years old. Kane didn’t know that he was addicted to it. Over time this behavior makes the kane couldn’t able to focus on his career and dreams.
After a long time, Kane realize that he couldn’t able to stop consuming porn. This makes Kane worry more.
He tried to stop porn for nearly 3 years by taking most of the porn recovery program and reading ten and hundreds of books related porn. Even if Kane stop porn for some months, he wouldn’t be able to control himself, lose discipline, and got into porn.
Later hundreds of attempts and difficult days, Kane’s mind started to learn to think rationality, which means he understands he is not addicted to porn.
He made the believe that he was addicted to porn without any proof, he made the thought on himself he “must” consume porn without anyone not made him to must consume it.
Where he also understands that porn images and videos are made of thoughts by constructed emotions of feeling by himself from the sensory and motor neurons.
Kane had stopped consuming porn when he was 27 years old, his life dramatically changed without porn.
All because when he started to think rationally.
It doesn’t matter how many books or courses are you take, when you haven’t changed your thinking and beliefs by practical logic by using the information you learned, you going to fail for your entire lifetime.
This same concept applies to the rational Investors in the stock market. So let’s dive into how they work.
2: rationality Investors
There is one of the technology Companies Google. The shares of Google are worth 120 dollars because worth value isn’t determined by stock price but by every Investor’s analysis.
When the Google price rose, all Investors started to buy, and then the price fell consistently for temporary reasons because of high supply, and all Investors started to sell without any reason.
When the price of Google goes under 120 dollars, 90 percent of the investors sell the stock even when the share of Google is 120$ worth.
No one is buying the shares of Google when it’s falling over and over. When the same Google stock rose above $200, Millions of Investors bought the $120 shares worth $200 price.
That’s why today Investors who behaved rationally in the stock market would make billions in their lives. For example Warren Buffet and Charlie Munger. So let’s see something about rational analysis.
3: rational analysis
There is a myth and saying today, that stock prices rise and fall for millions of reasons but that’s not true. The stock price only rises and falls because of one reason which is based on the demand and supply of the investor’s behavior in the stock market.
So no one knows when the price of the stocks will rise and fall without any strong reason. The common behavior of the 80 percent of the Investor in the stock market would be, that when the stock price rises all of them buy, and when the stock price falls all of them sell.
Because the raising of stock creates greed in the Investor’s mind, the falling of stock creates fear in the Investor’s mind.
Say fear is created if a stock falls for some long very consistently, the other stock holding Investor would think what if the stock falls more, then further and further?
The other Investor thought they loosed the entire investment without any proof by simply looking at the falling price of the stock.
They won’t believe in the company and management ownership business. They won’t sell and buy companies based on their earnings and book value.
On the other hand, rationality Investors sell stocks not because the shares of the stocks fall but because the Company earnings and management are falling.
To make you more clear about the rationality let’s jump into key matters now.
4: the key to rationality
The key to being a strong rational Investor is to be strongly reasonable in doing any activities with the right proof or evidence.
Non-Market rule: #100115
Rationality is the kind of thinking using ultimately reasonable logic instead of emotional judgment, which is the rational concept of thinking to make the right decision but it does not come into the market rule at any level.
So you are responsible for any decisions you make on yourself as an investor. If your investor and not comfortable or aligns investing with based on market rules please learn about how to regulate your investments under your control with the use of Rule investing.