If the market went up yesterday and you missed it, but you spend today trying to make up for lost time, you are chasing the last best news story and increasing your risks in order to make up for the money you didn't make yesterday. The market doesn't work that way. When I manufactured that fantasy, it was as if I gave myself a shot of feel-good. Typically, investors playing with borrowed money are using margin loans, which puts them at infinitely greater risk than if they gambled their own money until it ran out. Margin is not necessarily bad, but if you are borrowing money to play the next hot stock tip, you are acting more like a gambler than an investor.
Gamblers try to develop systems.
When those systems fail, Anderson says, the compulsive gambler starts to flail around and try anything, justifying his panic as a change in the system. Investors have systems, too. Making moves that are out of character and throwing your system for choosing suitable investments out the window is a sign of trouble. Many investors focus on what could have been or should have been. Had they only held a stock for a little longer, they would have made a killing.