Master Your Emotions - Joel Greenblatt

💬
The greatest enemy of the investor is himself. Fear, greed, regret, and pride cause more losses than any economic event. Master your emotions to master the market.
— The Little Book That Beats the Market，2005

🏠 Everyday Analogy

Emotions in markets are like steering on a wet road: the harder you jerk the wheel, the more likely you lose control. Rules keep decisions stable.

📖 Core Interpretation

Joel Greenblatt highlights that many investment mistakes are psychological, not analytical. Managing behavior under stress is as important as finding ideas.

💎 Key Insight：Emotional control is the foundation of investment success.

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❓ Why It Matters

In volatile markets, fear and greed push investors to buy high and sell low. A behavioral framework reduces avoidable, self-inflicted errors.

🎯 How to Practice

Pre-write decision rules, slow down trades during stress, and separate market emotion from business facts before adjusting positions.

⚠️ Common Pitfalls

✕Following crowd emotion at extremes

✕Mistaking confidence for certainty

✕Forcing trades to quickly recover losses

📚 Case Studies

Avoiding Complex Tech Mania (2000)

During the dot-com bubble, Greenblatt emphasized avoiding hard-to-value tech companies with no profits and unclear models.

✨ Outcome：Investors who stayed with simple, profitable businesses avoided the crash and outperformed over the next decade.

Apple Post-Dot-Com Bust (2000)

After the tech bubble burst, Apple traded at a low earnings yield despite strong product pipeline and improving profitability.

✨ Outcome：Investors focusing on high earnings yield and durable business saw significant multiple expansion and outsized returns over the next decade.

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