Buying with Greed, Selling in Fear

An old saying on Wall Street, “Market is driven by two emotions”

“GREED”, the want to get rich as rapid as possible. The Internet boom of the late 1990s is a perfect example. It seemed like an investment adviser had to pitch a “DOTCOM” suffix, tailed by dropping jaws – obscured eyes, leaping at the opportunity. Buying spree was all time high. Investors wanted MORE, fueling more buying, raising prices to incorrigible levels. The bubble finally erupts, depressing markets from 2000 to 2002.

“FEAR”, the bipolar twin thrives on negative verbatims like collapse and plummet. A domino impact, one news leads to the assumption of the other, driving the investors to become fearful of losses and compelled selling. Undoubtedly, this has a self-fulfilling effect of price descend. The herd behavior culminates in fear, leading to an unexplainable plunge. As greed dominates the market during a Boom, fear prevails following the Bust. To stem losses, investors sell stocks and buy safer assets.

Crucial is to dedicate a long-term mindset of investing and continuously stay invested regardless. Brings us back to Self-Discipline. Sound asset allocation is a strategy. It liberates from the What – When worries. The Get-Rich-Quick thinking conceals fundamentals. Financial pitfalls are litmus tests to principles of investing.

Warren Buffett described in a shareholder letter in 1986. “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful”

#Askxanara #wealthmanagement #banking #portfoliomanagement #bankingindustry #familyoffice #assetmanagement #financialplanning #financialadvisors #investments #financialadvice #financialservices #investmentbanking