Emotional Vs intelligence quotient for investment

Prof. S.Saravanan, Sankara Institute of Management Science

As human we are more emotional than logical in decision making. As society progress with technology we perceived that we make decision based on facts but in reality, our decisions are based on results which affect out emotional wellbeing.

The study conducted by Accenture identified that emotional intelligence is powerful in career success. The research shows that people with high interpersonal and awareness about society have higher career success than intelligence. Emotion plays a bigger role in decision making related to finance of companies or individual. The financial success is high when the emotional quotient is high comparing to other quotient.

      In 2012 a study in USA showed that a person with high EQ earns 1.5 times more than the people with same level of degree and intelligence. In stock market trading, high EQ make more money than low IQ, when the traders understand the emotional and stock market equally.

Greed and fear drives the stock market. A trader should know when to be greedy and should also know when to be fearful of market conditions. If the investor cannot control his emotions they cannot control the money. With increase in technology for trading, information technology is taking over the investment decisions with intelligence but good trader with EQ has competitive advantages. Information technology can help in gathering data and recommend the investment for investors, where human touch is required for investing. Client choices are very important, for investment managers with high EQ Vs IQ determines the better results. People with high EQ maintain calm and perform better in any situation.  Emotional intelligence is important component for perfect competitive advantage tools for financial managers.