Money 101 · Episode 22
I sold Bitcoin at six thousand dollars. I told myself it was smart. Lock in the profit. Double my money. Who knows where it goes from here. Two years later it hit sixty-nine thousand. That was not a rational decision. That was fear — dressed up as logic. And I couldn't tell the difference.
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Not financial advice. For educational purposes only. I am not a financial advisor. Always do your own research and consult a qualified advisor before making any investment decisions.
Look... I sold Bitcoin at six thousand dollars. I told myself it was the smart move. Lock in the profit. Double my money. Who knows where it goes from here. Two years later it hit sixty-nine thousand dollars. That was not a rational decision. That was fear — dressed up as logic. And I could not tell the difference in the moment.
"Every financial decision you make happens twice. First emotionally. Then logically. The problem is your brain never tells you which one came first."
Look... neuroscience research, including work by Antonio Damasio on patients with damage to the emotional centres of the brain, shows that without emotional input, humans struggle to make decisions at all. Emotion is not a distortion layered on top of rational thinking — it is a core component of every decision we make. The brain generates an emotional response first, and the rational mind then constructs an explanation for it.
In financial decisions this creates a specific and consistent problem. You feel fear, greed, excitement or regret. That feeling generates a decision impulse — sell, buy, hold, avoid. Your rational mind then constructs a logical narrative that explains and justifies the decision. The logic feels real. It is coherent. It is detailed. But it arrived after the decision had already been made emotionally.
Look... selling Bitcoin at six thousand dollars is one example. The emotion was fear — of giving back gains, of looking foolish if it fell. The logic was "lock in profits, who knows where this goes." The logic was not wrong. It just was not the real reason.
A second time was staying in a losing position far longer than I should have. The emotion was hope — that the position would recover and I would not have to admit the loss. The logic was "the fundamentals still support the thesis." The fundamentals had not changed. The hope had simply found a rational justification for itself.
A third time was avoiding a sector that had performed strongly for years because it felt like it had "run too far." The emotion was regret at not having been in earlier — which created an irrational aversion to entering at all. The logic was "the valuation is stretched." The valuation argument was true. But the real driver was regret, not analysis.
Look... you cannot eliminate emotional decision-making. It is how the human brain works. But you can create a gap between the emotional impulse and the action. Writing down the decision and the stated rationale, then waiting 24 to 48 hours before acting, consistently reveals the emotional component that the initial logic conceals. What felt like a clear rational decision often looks different when the emotion has had time to subside.
Do emotions affect financial decisions?
Yes, consistently and significantly. Research in behavioural finance and neuroscience shows that emotional responses precede rational analysis in most decisions. In financial contexts, fear, greed, hope and regret regularly drive decisions that are then rationalised with logical-sounding explanations after the fact.
How do I make more rational investment decisions?
Creating a deliberate gap between the impulse to act and the action itself is one of the most effective techniques. Writing down the rationale for a decision and revisiting it after 24 to 48 hours allows the emotional intensity to reduce and the actual quality of the reasoning to become clearer.
Why do I sell investments at the wrong time?
Timing errors in selling typically involve either fear — selling to stop the pain of losses or to protect gains — or regret avoidance. Both emotions generate rational-sounding justifications that can be difficult to distinguish from genuine analysis in the moment.
