A Psychiatrist's Take on Stock Investor Types: Personality Dictates Investment

Stock investors primarily seek counseling for two main reasons. The first type involves experiencing significant losses and suffering from a sense of deprivation. They report not only financial losses from investment failure but also mental distress. The second type is those who invested secretly, often without their spouse's knowledge, incurred substantial losses, and are on the verge of being discovered. These individuals suffer more from the extreme anxiety and guilt of their secret being revealed than from the loss itself, leading them to seek counseling with daily apprehension.

Checking stock charts daily cannot be definitively labeled as a bad habit. Continuously monitoring stock prices can indicate that an investor still has the capacity to maintain interest in the market and engage in investment activities. In reality, we often don't engage in significantly more productive or valuable activities outside of checking stock charts. Rather, checking stock information during time spent on unproductive activities like messaging on KakaoTalk can even be seen as a way of managing one's time.

Director Choi Myung-ki revealed his investment style: he prefers to sell immediately upon incurring a small loss and, conversely, sell again once a certain level of profit is achieved. This investment method makes it difficult to expect large profits but focuses on effectively managing risk by preventing enormous losses.

There are four main psychological factors that determine one's stock investment personality. First, novelty seeking. A high score here indicates a tendency to prefer volatile stocks, often referred to as 'junk stocks,' while a low score indicates a preference for planned and stable trading. Second, harm avoidance. Investors with high harm avoidance tend to be easily scared by small losses, leading to frequent trading and stop-losses.

Third, social sensitivity. This indicator determines how easily an investor conforms to market trends or the investment behaviors of others. High social sensitivity can make one vulnerable to FOMO (Fear Of Missing Out) — the "everyone else is doing it, so I should too" mentality. Fourth, persistence and autonomy. Persistence refers to the ability to maintain a long-term perspective in investment, while autonomy represents how one responds to investments based on their sense of responsibility and competence in their own investment decisions.

These psychological variables interact in complex ways to form each investor's unique personality and investment type. Understanding these tendencies is a crucial foundation for making rational investment decisions. For example, investors with high novelty seeking might enjoy volatile markets, but those with high harm avoidance might experience extreme anxiety in such markets.

The psychological tendency to perceive the highest point of a stock account as one's actual money causes extreme feelings of loss when stock prices fall. Investors often view the highest point their account reached as if it were their break-even point or an already secured target profit, even if they haven't actually realized those gains. This perception makes them feel as if they've been dismissed from a position or lost something they owned when stock prices drop.

This is a perfectly normal psychological reaction experienced during the investment process; feeling pain itself is part of a healthy self-recognition process. The problem arises when the depth of this sense of loss becomes excessive and hinders rational judgment.

When investors find it difficult to make trading decisions, they can consider an 'sell first' strategy. This is an approach to step away from the market and gain an objective perspective when unsure whether to sell. Director Choi Myung-ki emphasizes that this should be taken seriously, not as a joke.

By selling first, investors can psychologically step back and observe the situation calmly. It is important to recognize that if they later believe their judgment was wrong, they can buy back an hour later or at any time. This can be an effective method to prevent impulsive emotional trading and aid in rational decision-making.

One of the most dangerous psychological states during stock investment is 'panic.' When extreme anxiety and stress accumulate, physical symptoms such as heart palpitations, shortness of breath, dizziness, and tremors throughout the body can occur. Such panic attacks lead to a severe situation where the body, not the brain, dictates trading choices.

In a state of panic, rational judgment becomes impossible, and there is a greater likelihood of making impulsive purchases or irrational decisions while agitated. If such psychological self-regulation becomes too difficult, it is crucial to seek professional medical help. Panic can lead to not only psychological but also physical and behavioral problems.

FOMO (Fear Of Missing Out) is a common phenomenon in investing, stemming from the anxiety that one will be left behind or excluded if they don't participate in investments everyone else is making. This can be seen as part of a social conformity phenomenon to maintain interpersonal relationships. When everyone around is growing their wealth through a specific investment, one might feel relative deprivation if they are not part of that trend, fearing they will fall behind financially.

This psychology is not just about following trends; it is also intertwined with realistic economic backgrounds like inflation. The perception intensifies that if one remains passive while everyone else is accumulating assets, they will become relatively poorer. Therefore, the desire to follow investments that everyone else is doing can be understood not as an abnormal psychology, but as one of the normal human psychological responses to social and economic environments.

When faced with a dangerous situation, humans react in three main ways. First is the 'Fight' type: when stock prices plummet, they see it as an opportunity and exhibit a hunting instinct to buy more. Second is the 'Flight' type: due to extreme fear, they irrationally sell all their stocks, realizing losses. Third is the 'Freeze' type: their mind goes blank, unable to make any judgment or action, merely observing the situation.

These instinctive reactions significantly influence investors' decision-making in rapidly changing stock market conditions. Recognizing one's reaction type can help reduce emotional judgments and formulate rational response strategies.

Psychological tests do not guarantee success in stock investment. What is important is an attitude of acknowledging one's temperament rather than blaming oneself. Humans always strive to make choices they deem most advantageous within their intelligence, experience, and inherent personality traits. Instead of blaming oneself for unfavorable investment outcomes, it is crucial to understand the process that led to those choices and one's psychological characteristics.

This understanding forms the basis for making better decisions in future investments and allows one to objectively analyze the situation and learn from investment losses rather than excessively blaming oneself. Ultimately, accurately recognizing one's investment tendencies and limitations is the path to becoming a wiser investor in the long term.

The excitement felt during the investment process is an intense emotion that humans rarely experience in daily life. Director Choi Myung-ki points out that many investors undervalue the excitement they experience. When something we like meets uncertainty, humans naturally feel excitement. This is similar to the thrill of gambling.

However, this excitement inevitably comes with a price: the anxiety that comes from the risk of loss. Excitement and anxiety are two sides of the same coin; behind the intense pleasure derived from uncertain situations lies a corresponding anxiety. Therefore, investors need to acknowledge the value of the excitement they feel during the investment process and accept the accompanying anxiety as an inevitable emotion. It is crucial to understand these two emotions in balance.

If you only feel anxiety from stock market volatility and gain no pleasure, stock investment might not be for you. If the excitement you currently feel is excessive, you need to reconsider your investment strategy. For investors who are severely swayed by significant market fluctuations, choosing less volatile stocks is a wise approach.

Conversely, investors who maintain patience even during long-term sideways markets and are not easily shaken may have a temperament that feels less excitement from market volatility. They might be more suited for relatively stable investments. Adjusting investment stocks or strategies based on one's personality traits and anxiety levels is key to successful investing.

Ultimately, investing is like wearing clothes that fit one's psychological state and temperament. Rather than continuing risky investments while experiencing excessive anxiety, finding a stable investment method that suits you and maintaining psychological peace is advantageous in the long run. Choosing less volatile stocks can be an effective way to reduce such anxiety.

Metacognition is the ability to clearly distinguish 'what I know and what I don't know.' In investing, accurately recognizing the limits of one's knowledge is extremely important. For example, mistaking knowing 10 when one only knows 6 is a state of impaired metacognition, which can lead to incorrect investment decisions.

True metacognition begins with honestly acknowledging one's limitations. It requires a humble acceptance of what one doesn't know and a willingness to seek expert help or expand knowledge through additional learning when necessary. This metacognition is a core competence that helps investors objectively evaluate market conditions, avoid reckless investments, and make wiser decisions.

Attributional ability, which is the ability to analyze the causes of investment outcomes, is crucial for rational investor decision-making. People with poor attributional ability tend to mistakenly attribute results driven by luck to their own skill, ability, or effort. When making successful investments, one must clearly distinguish whether it was due to good market luck or accurate analysis and judgment.

Individual ability and effort are controllable factors, whereas task difficulty or luck are uncontrollable. Overestimating profits due to luck as one's own skill increases the risk of making poor judgments in subsequent investments. This can lead to overlooking risks or excessive confidence, ultimately resulting in significant losses. Therefore, developing attributional ability to accurately identify the causes of success and failure is essential for long-term investment success.

Investment cycles in the stock market are repetitive, and no investor perfectly captures all profits. Even if one incurs losses or doesn't achieve desired profits in the current cycle, this should be treated as valuable experience for the next cycle. Current losses are not failures but a learning process for future success.

This perspective helps investors avoid discouragement and maintain a long-term view. Even investors who made substantial profits by selling at a peak now may have experienced significant losses in the past. What is important is to analyze and improve one's investment strategy based on current results and prepare to more effectively utilize the next upcoming investment opportunity.

Ultimately, investing is a process of understanding the market with a long-term perspective, continuously learning, and developing, rather than being swayed by short-term successes and failures. It is crucial to have hope that the lessons learned from this cycle will lead to wiser and more successful investments in the next cycle.

While investment losses are certainly painful, their weight is very light when compared to life, the most important value in life. Director Choi Myung-ki emphasizes that all problems are minor compared to the immense fact of death. Regardless of investment outcomes, an individual's happiness and unhappiness exist independently of stock investment results.

Humans possess 'life,' a value incomparably greater than assets like stocks. Therefore, no matter how great a stock investment loss may be, it is crucial to recognize that it is an extremely small part compared to the fundamental value of life. This perspective helps investors avoid losing the meaning of life or making extreme choices due to losses, and maintains a healthy outlook on investment.