The Emotional Investor

Look at this table:

Let us assume we have a investor who checks his account every minute. Let us assume when it goes down his emotion is minus 2.5 and when it goes up his emotion goes up 1.Assuming a rate of 50 percent goes up and 50 percent goes down he will be emotionally exhausted at the end of the day. It also means there is a lot of market noise in short term situations.

What is market noise?

💬 What Is Market Noise?

Market noise refers to the short-term, random price movements in the market that do not reflect real information or long-term value. It’s like static on a radio—lots of activity, but no clear signal.

📉 Examples of Market Noise:

• A stock price drops because of a rumor on social media (but nothing actually changed).

• Prices bounce around during the day without any major news or events.

• A sudden spike because a trader accidentally enters the wrong number of shares (called a "fat-finger" error).

🔁 Noise vs. Signal:

🧠 Why It Matters in Investing:

• In short timeframes (like seconds, minutes), price changes are mostly noise — unpredictable and not meaningful.

• Over longer timeframes (like months or years), real value shows up, and noise cancels out.

• Checking your investments too often makes you see more noise, which can make you panic or make bad decisions — this is part of what Fooled by Randomness warns about.

In other words: Market noise is the random ups and downs that happen in the market for no reason what so ever like when ronaldo put pepsi aside and said water causing pepsi to fall.

Thank you for reading I hoped you enjoyed reading todays newsletter!!!

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