Stock Doc: The Narcissist Investor

Taken together, these characteristics can lead an investor to neglect vital data points that enter into the equation because the points were initially unexpected. To a real narcissist, unexpected or unpredictable data points have no right to impact what they see as their perfectly orchestrated trades. They can become furious, even hostile, when reality doesn't align with their predictions.

One of the most animated clients I coach could not get out of trades early enough because he was absolutely certain of his target marks for his trades. In some recent trades involving Marvell(MRVL Quote) and eBay(EBAY Quote), he was so overconfident in his strategy that he ended up giving back a huge chunk of his return because he ignored all data available to him. His narcissism was his own worst enemy on trades, and I had the rewarding job of delicately telling him that he needed to start questioning some of his decisions and his sense of omnipotence.

Since many potential narcissists believe they are never wrong and that the world should react in accordance with their strategies and theories, they are prime candidates for exploitation by the vicissitudes of the markets. If they are unaware that their grandiosity and self-entitlement may affect their trades, they risk getting crushed by holding on to a position too long or getting out of one too early.

The key here is to find a balance between overconfidence and self-doubt. This will allow you to control your emotions and make objective decisions that account for your blind spot. So even if you are very successful at whatever you do professionally, as a trader your best asset can be remembering some of your past mistakes and identifying your weaknesses.

Please write to the Stock Doc with your trading, emotional or investing dilemmas. Dr. Cass always welcomes comments and stories, for which he'll try to offer valuable solutions in later columns.