In the following series of stock market psychology, we read the words of an active shareholder in the Wall Street market: I think that after pride, the worst enemy of a person to judge correctly in the stock market is the greed that we should avoid. If I could sell every stock I had so far at the price I expected when I bought it, I would be better off now.
It has happened many times that I have decided to sell a stock on the same day I bought it, and then when the price almost reached the desired level, I stopped selling because I thought a few hundred dollars in profit was not enough, and without exception every time due to greed for more profit. , I stopped selling, later the stock price dropped and I had to sell my stock at a lower price than I originally intended to sell.
We have heard disappointing phrases like “If I had sold at the time" many times, but we all use them. Because greed is rooted in all human beings, it is usually harder for us to decide to sell than to buy. Every broker knows that not one in ten clients will not only heed his warning to exit the risk market. Rather, he acts on the advice of people he believes in, just as he will buy on the advice of those people.
The explanation is that when you buy stocks, you see a chance to make money, but when you sell, you lose hope for more profit. No one likes to put themselves in that position. Isn’t that so? Thus, greed seems to outweigh the danger. People are naturally so optimistic that they are not simply afraid, at least not simply to act in their favor. Optimism, as good as it is, can have unintended consequences. Not every optimist is quick to believe, but most optimistic people seem optimistic.
The optimist always thinks that the market is growing. He can not imagine a downward trend in prices in the long run, but when fear overwhelms us, it acts faster than passion. As a result, in the stock market, we see more of a rising trend. We are reducing prices, and of course the sluggish market will never last as long as the thriving market.
Perhaps one of the reasons that stockbrokers are more inclined to buy than to sell is not simply the natural optimism of brokers and often their mistake, but the will of the customers themselves. Their greed makes brokers ask them to recommend buying.
Suppose a stockbroker predicts a booming situation that will not happen, the public will forgive him, but if he becomes pessimistic about the market situation too soon and announces a price reduction that has not yet happened, he will lose his reputation. Gives. Those who, on his advice, sold their stocks before the price peaked will never forget how much they might have made.
Some time ago, a young lady asked me how to invest $ 1,000. I told him: “Spend this money on a trip to Europe so that no one can take it away from you, but if you think it is better to invest in the stock market with this money and buy stocks when prices reach their peak, you should know. “You will lose all your money." And he lost exactly that money. At first he decided to travel to Europe, but his greed caused me to lose both the money and the opportunity to travel to Europe.
Here I recall a telephone conversation I heard in a broker’s office. An investor was talking to someone who was his friend and mentor in stock trading.
“But if these stocks only make as much as 9 units, I might prefer to buy other stocks," he said. “You know, I have to make 25 credits to get the money I want and get out of the market."
There are very few who can sit back and wait for good prices. Greed is one of the enemies of patience.
Once when I was in the brokerage office, with a crowd of about 100 clients in his office, I asked him, “How many of these people will go out of business with a profit?"
He replied simply: “Nine out of 10 people lose because the first sharp drop in the stock market price will temporarily knock them out, no matter how conservative they may be at first, and keep their savings in the bank." Greed causes them to waste all their money and can no longer bear even a fleeting drop.
The worst losses in the stock market naturally occur when people buy stocks at very high prices, and the surprising truth is that people buy this type of stock with full knowledge of high rates. But they expect to sell them to someone else at an even higher price, just like the Florida stream that happened. Those who paid $ 10,000 for swampy land to sell it to victims who are more naive than themselves.
Walking on ice…
A friend of mine, Willard Kiplinger, known as the Washington thinker, gave a simple explanation of how false stock values created by greed are doomed to fall. He and I were having dinner with a friend, Kiplinger noted: “I think the stock market can be described as follows: I have an ice cream bowl that I bought for 10 cents.
Robert, the waiter comes and tells me that all the ice cream is gone and we don’t have any more ice cream tonight. Suddenly it seems that my ice cream is very valuable to you and you say that you are willing to buy it for 12 cents from me, then Bill, who wanted to order ice cream, offers you 13 cents. You, a Scottish (money lover), can not resist making a profit.
Bill exaggerates and brags about ice cream so much that I think I’m so naive that I want to lose my ice cream and because of that, I buy it for 14 cents. But this is when I realize in despair. “I hear that the ice cream has melted."
Published and authored by FalconProfit.com