Proverbs 3:21-22 – “My son, do not lose sight of these – keep sound wisdom and discretion, and they will be life for your soul and adornment for your neck.”

Who is your worst enemy when it comes to investing?  That is easy to answer.  You are.  When you succumb to your emotions while making investment decisions you are saying how you feel now or how others are behaving now are the key ingredients for the decisions you make.

Emotions often drive terrible decisions in the world of investing.  Here are five ways I drive emotion out of my investment decision-making.  It starts with having wisdom.  Keep sound wisdom in view when you are making decisions.

1.  Think like an owner.  Owners don’t buy and sell.  They buy to own because they see a long-term prospect. Use understanding and wisdom.  Be thoughtful.

2.  Have a written plan.  My plan defines the rules or markers I always use to buy an investment and why I might sell.  The why I might sell includes winners and losers.  The plan has a measurable goal that can be reviewed quarterly or annually.

3.  Track the dividend increases as they happen.  This is easily done using free data available every day on the Wall Street Journal web site. This is an extremely powerful motivator to stay my course.  My yield on cost (the price I paid for an investment) is often astronomical.  My yield on current value is usually very, very good.

4.  Separate risk from volatility.  Volatility is not risk for 95% of the investments in our portfolio.  Volatility is just a bumpy road on the way to the defined destination.  Volatility is current perception, not necessarily value.  I can handle the bumpy road with good shock absorbers.  Avoid basing your decisions on the current thinking.  Do you remember when others were saying AAPL had seen it’s best days just a couple of months ago?  So sad.  Many sold in fear and others were afraid to buy because of fear.

5.  Continually reinvest the dividends, especially when the market is volatile in a negative manner.