Confidence improves

As our confidence improves, we should take countermeasures
to keep our feet on the ground so that we maintain our
sense of equilibrium. At the beginning of an investment campaign,
this is not as much a requirement as it is as the campaign
progresses, because fear and caution help rein in our tendency to
make rash decisions. As prices move in our favor, the solid anchor
of caution gradually disappears. This means that sharp market
movements that go against our position hit us by surprise. It is
much better to be continually running scared and looking over
our shoulder for developments that are likely to reverse the prevailing
trend. Such unexpected shocks will be far less frequent
because we will have learned to anticipate them. When events can
be anticipated, it is much easier to put them in perspective. Otherwise,
their true significance may be exaggerated. The idea is to
try to maintain a sense of mental balance so that these psychological
disruptions can be more easily deflected when they occur.