Feeling and finance don't mix! And yet each affect the other: you're feeling well when you're financially well off, and you handle your finances well when you're feeling well.
I didn't feel well at all when, after saying my final good-bye to an old friend in hospital, I decided to divest myself of most of my BHP shares at an average price of $59.40, only to see them soar the next day to a new high of $62.72. There had been nothing more behind my decision to sell other than a feeling that I ought to live my life more deliberately without spending too much time deliberating over financial matters.
Isn't it strange how the human mind works? I had lost no real money — in fact, I had made a profit by selling at the low $59.40 — and yet there I was regretting having lost out on the extra three dollars a share I could have made had I sold out just one day later - IF I had sold out at all!
There is a perceived understanding that when the miners go up, the banks go down (and vice versa), as money managers rotate their funds from one sector to the other. And right on cue, CBA fell off the cliff:
All cashed up from my recent sale of BHP and with nowhere to put the money, I spent a portion of it on buying into CBA. As shown on the above chart, after a day of hesitation during which my purchases showed a loss, CBA took off again towards its former 52-week high of $192, and I regretted not having bought more. That strange human mind again!
Today it was BHP's turn to fall off a not-so-steep cliff, when its shares dropped from Friday's close of $60.46 to today's close at $58.77. In the meantime, CBA had risen further to $160.74. I won't bore you with the details, but had I, instead of selling too early, not sold out at all and thus also not had the money to buy into CBA either, I would now be a lot worse off. Speaking of snatching victory from the jaws of defeat!
