How to Feel Confident in Your Investing Choices

Investing is not something that comes easily to everyone overnight. It’s something that you need to work at in order to feel more confident in.

It’s a lot like learning public speaking. I remember the first time I stood up in front of a crowd — I felt like the dumbest guy in the room. My palms were sweating, I was questioning everything I knew, and honestly, I just wanted to sit back down. But the more I practiced and prepared, the more confident I got. Investing works the same way. You can’t expect to feel confident overnight — you’ve got to put in the time and effort to get there.

When it comes to the stock market, investor confidence is very important.

The best thing you can do to become more confident and rational when you invest your money is to really understand what you’re buying.

Having confidence as an investor helps you to make better decisions when owning a stock over time while allowing you to really understand what is going on at a specific moment in time.

Why Rule #1 Investors Are Different

Many people are emotional investors...

When you start investing, you’ll tend to look at what your money is doing every day and when there is a sudden drop in the market, probably right after you buy the company, you’re going to freak out.

Here’s the thing — most of us are wired to panic when something goes wrong. When you invest, it’s almost guaranteed that the stock price will dip right after you buy. And that’s when people start to freak out. But with Rule #1 investing, I know I’ve found a great company that’s on sale — and that helps me stay calm. Instead of panicking, I see those dips as opportunities to buy more at an even better price.

When you let your emotions take over your investing, you are more likely to jump ship and actually lose out in the long run, all because the stock you bought took a little dip.

It's true that fear impacts the stock market...

When investing, it's important for you to have enough confidence in your investments to not let the fear impact you.

Rule #1 investors are not emotional investors. We’re rational investors and were confident investors. Here are 3 ways to feel more confident in your investing choices.

1. Understand the Business: The First Step Toward Investor Confidence

You want to know that you are buying from an amazing company so when the stock price does momentarily go down, you are not triggered to make an emotional move to sell your stock.

I like to think of it this way — it’s like buying a $10 bill for $5. If the market suddenly offers it for $4 or even $3, I’m not upset — I’m thrilled, because now I can buy more at an even bigger discount. That’s what gives me confidence when I invest.

One of the benefits of knowing that you are investing in a great company is that you know the company will be around in the next 10 years so, most of the time, it doesn't matter what happens in the short term, just in the long term.

Beyond knowing a company's financial metrics, you also want to know that the company is run by great people.

2. Invest with Confidence: Trusting Your Research

Having more confidence in the company results in more confidence in your investment choices for that company.

When you know that you have really found a great company, you want to do your best to buy it on sale. The good thing is, is that if you do your research and know that you’re buying something amazing, AND you’re buying it on sale, how could you be upset when it goes on sale even more!? You know what that company is really worth, and you know that it will come back up to its non-discounted price eventually.

Instead of worrying about if your decision was a good one or not, you know it was a good one and you won’t worry about little dips in the market.

When you invest like this it's hard to not be confident when you know you have everything to gain, because you truly understand a business and what you’re buying.

I always make sure the company has a real moat — something that protects it from competitors — and that it’s run by people I trust. When I know I’ve got a business with a strong moat and honest leadership, those short-term price swings don’t bother me.

3. Avoid Emotional Investing Mistakes with Research

In the end, what you need to do in order to stay successful in the market is to learn about the companies that you choose to invest in. By taking the time to really research companies, you can figure out if they are a good idea or not add to your portfolio.

Remember the key here is to know what you’re buying and to always stay rational. Don’t let your emotions get the better of you.

Have you ever pulled your money out of a company when the price went down, and then your stock shot up like a rocket?

One last thing I want you to remember: I call it the “emotional rule of investing.” If I buy it, it’s probably going to go down. If I don’t buy it, it’s probably going to go up. That’s just how it feels sometimes! So don’t let your emotions run the show — stay rational, focus on your analysis, and keep your eyes on the long term.

Learn more about how to take your emotions out of your investing and make great returns from my free Transformational Investing Webinar.

**Editor’s Note (Updated May 2025): This article was originally published in 2019 and has been updated in 2025 to reflect current examples and Rule #1 investing insights.