But in practice, this strategy almost always fails. Which is undoubtedly leading many investors to either panic and sell or hold off on investing new money until the “dust settles.” In theory, their reasoning is sound: by waiting for the market “to bottom,” they’ll avoid further downside and be able to buy back in at lower prices. During such times, it’s hard to imagine stocks ever going up again. Which is why when it comes to investing it is not greed but fear that is good.Īll news seems to be bad news and as one might expect, forecasts of impending doom are running rampant. On the other side, extreme greed inevitably leads to poor decision making, chasing higher risk securities with little long-term reward. Why? Because extreme fear creates the opportunity to add capital at lower valuations and a more favorable balance between risk and reward. Still, if given the choice between a period marked by extreme greed or extreme fear, long-term investors should always prefer the latter. Is extreme fear always followed by positive returns? No, there’s no such thing as always in markets and in the short run anything can happen. I am starting the blog post with two short posts dealing with, what else, the ongoing bear market of 2022 and some selected excerpts: No ads, no clickbait, just amazing content I discover along with my sometimes witty and seldom incendiary commentary. Welcome to all new blog readers from George, your diligent curator of the BEST web content I find and share with you.
This blog publishes every Friday these days.īest of Web articles are truly exceptional and MUST reads in their entirety, imho. You like my blog? Send a link to someone please!
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