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Blog It Out

Juliana Caro

COM1400-H50 Speak Up!

Cleary University

Prof. Justine Defever

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MAKING RATIONAL FINANCIAL DECISIONS

Making rational and no emotional financial decisions can be hard.

It is hard to decide whether or not to buy a t-shirt, a pair of jeans or even a pair of shoes. Do I

need it? Am I going to wear it? Do I have the money? Does its value have coherence with the

product? Could I find it cheaper in another store?

All of those questions come to mind when we are thinking about spending our money; now

imagine how hard it is to make rational decisions when working with the stock market in places

such as Wall Street.

When you are at school you learn about how government actions can increase or decrease the

price of a stock in the market, and how to analyze the market to make the right investment, but

when that turns into an instant decision you can’t make mistakes or take hours to make the

decision. Everything changes in a second!!

I remember my first job, where I had to take instant decisions while everyone was yelling in

the room, with phones ringing all over the place, and someone pressing you to give the final

word. When I came back home the only thing I was thinking was: how am I going to survive

this? Is it going to be like this all the time? Why did no one tell me it was going to be that hard?

How if tomorrow I lose all my money? What if I get fired?

It is normal to be afraid the first day, and I’m not gonna say it’s going to be easy, but I have

experience and I will tell you what I would love someone to tell me before getting my first job in

the stock market.

So, what will I do when working at places like Wall Street?

Well, here I have 3 tips that will take you to rational financial decisions.
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1. HAVE A PLAN

“Have a plan for when they are going to enter, when they are going to exit, and how much

they are going to risk if the market moves against them” (Sarhan, n.d.). Came to work prepared

for what could happen with specific actions depending on the situation will help you to be

prepared if the market is going against you. When I started to work, I was aware of the latest

news and market movement, and what could happen during the day, so I could study with time

the decision with my mind clear and make a rational decision the wouldn’t be affected by the

stress of the moment.

2. MANAGE YOUR RISK

“History shows us that one key to long-term success on Wall Street is to always respect

risk.”(Sarhan, n.d.) Before start doing transactions it is good to know how far will you go and

how much are you willing to lose, so it is important from the beginning to set numbers that

describe the percentage you are comfortable risking, such as how much you will need to lose

before stopping investing or how much I am going to spend per stock in the market. In your

financial classes, you will learn some formulas to calculate the risk your business can take, SO

MAKE SURE NOT TO BE SLEEPING IN CLASS!!!

3. ACCOUNTABILITY

“The final point that helps people behave rationally is to be accountable”(Sarhan, n.d.). It is

important to never work alone, have a partner or a financial advisor because when emotions

govern your head, bad decisions will come. It is important to remember that what you are doing

is not affecting just you, but also more people such as your family or your coworkers, so make

sure always think responsibly.

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I know that it’s a lot of information but with practice, you can achieve rational financial

decision-making skills, make sure to take advantage of all tips you can learn at school, go further

and find stock simulators that will train your brain and will give you all you need for your future

job, and the most important part is NEVER FORGET TO ENJOY THE MOMENT!!!
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References

Sarhan, A. (n.d.). 3 Ways To Make Rational, Not Emotional Decisions, On Wall Street.

Forbes. Retrieved January 24, 2021, from

https://www.forbes.com/sites/adamsarhan/2018/02/09/3-ways-to-make-rational-not-

emotional-decisions-on-wall-street/