Stock Doc: Stocks, Emotions Don't Mix

Editor's note: Alden Cass, a psychologist, writes two columns for TheStreet.com: one that delves into how behavior and emotions affect investing, the other a health column specifically for men.

One of my favorite movies of all time is Wall Street, in which Michael Douglas portrays Gordon Gekko, a cut-throat arbitrage tycoon. In one scene, Gekko tells Bud Fox (played by Charlie Sheen) to never get emotional about stocks because it clouds judgment.

When it comes to making a trade or an investment, many individuals fall into this trap and remain unaware of it until they have lost too much money to recover.

This reminds me of a past client of mine, whom, to protect his identity, we'll call "Matt." He had been a big fan of drug company Pfizer(PFE Quote). His now-deceased father had given him Pfizer shares, which he'd purchased at $11 in 1996, prior to the stock's renaissance years. Matt loved this stock, and he made tremendous returns from it.

Matt came to my office because of his inability to make significant life decisions concerning his career and family. It turned out that his inability to pull the trigger at the right time applied to his trading as well. I cut him some slack for being indecisive because, as a research scientist, he would labor over decisions and was extremely meticulous.

My work with him proved to be successful in a variety of ways. He learned how to manage the anxiety that always appeared whenever he was faced with making a quick decision without sufficient data. Once we worked through his career and marriage concerns, we moved on to his personal trading, specifically his attachment to Pfizer. He simply could not let go of that stock. He was too nostalgic about it, as he associated it with big returns and his father's legacy.