Optimism – A positive outlook encourages us about the future, leading us to buy stocks.
Excitement – Having seen some of our initial ideas work, we begin considering what our market success could allow us to accomplish.
Thrill – At this point we investors cannot believe our success and begin to comment on how smart we are.
Euphoria – This marks the point of maximum financial risk. Having seen every decision result in quick, easy profits, we begin to ignore risk and expect every trade to become profitable.
Anxiety – For the first time the market moves against us. Having never stared at unrealized losses, we tell ourselves we are long-term investors and that all our ideas will eventually work.
Denial – When markets have not rebounded, yet we do not know how to respond, we begin denying either that we made poor choices or that things will not improve shortly.
Fear – The market realities become confusing. We believe the stocks we own will never move in our favor.