Join Date: Jan 2008
Location: Southern Cali
Quoted: 1 Post(s)
Total Points: 200,000,445,246.25
Originally Posted by Nwahs !!
There isn't really much math involved, nothing that your average 5th grader wouldn't understand.
The thing that most people find difficult about the stock market is the fact that it is driven by emotion much of the time. Many people see something going down and they get scared and sell, or they see something going up, so they buy, only to find out that they just bought at the top, and it is going to take a huge plunge.
Its really counter intuitive. You want to sell into strength and buy into weakness. You are always going to kick yourself saying, "if only I held onto that stock just a little bit longer", but selling into strength is the right thing to do, as is averaging down into weakness.
When I am talking about strength and weakness, I am not talking about the company itself, but the sentiment of the investors. Often times, they will panic and bid down a stock to unbelievably low prices without any rime or reason.
This is what really scares people, they see the stock going down, and dont know why, so they sell and lose money, when in reality if the stock is taking a dump for no reason at all, its time to back up the truck and grab all you can.
Its kinda like fighting in the pocket, everyone is scared to try it, but once they do, nothing bad can happen to you (thats not completely true, but you get my point).
I see many people that are fanancially smart, completely dumb founded by the market.
I believe most people want to believe that the market is some complex beast, something hard to understand, but its not.
gotcha. so it sounds like the biggest problems people have are investing emotionally and finding themselves making incorrect assumptions about a company's given position without having much of a concrete reason behind it.
i've probably done that everytime i've either bought a ****ty company or sold at the wrong time.