Tuesday, May 22, 2007

Fear, Not Greed, Must Animate Your Investing Decision

Greed. It is the motivating emotion for anyone who invests or trades. Greed, despite what some would say, is neither good or bad. Greed is nothing more than the desire for more than needed. That is why I invest, to achieve excess wealth such that I have more than I will need at some future date.

But while I invest and trade because of Greed, I do not let Greed animate my investing and trading decisions. Rather, I rely on an entirely different emotion to guide my way in the market. The emotion on which I rely is Fear.

I rely on Fear because I find that it provides the voice of reason in contrast to Greed’s “siren song” which often sounds pleasing, but masks hidden dangers. My Fear serves to place a rationale check on Greed’s unbridled enthusiasm telling me to buy, buy, buy or sell, sell, sell. No matter a trader or investor, fear should have the same value to you.

Whether you follow a fundamental process and find an asset that sells for sixty cents on the dollar; or you are a technician whose analysis indicates that a stocks behavior is demonstrating a positive risk to reward scenario, Greed without Fear exposes you to unknown factors. Greed tells you all the reasons why you should make the trade, Fear asks you to consider why you should not.

Yet most would rather be Greedy than Fearful. Perhaps because nothing that serves to check your passion is ever popular. Yet Fear, properly embraced, can serve you much better than Greed. Fear, unlike Greed, forces you to stop and ask yourself not what is it that my Greed will earn me, but what is it that my Greed will cause me to lose. That is Fear’s value to any new investor or trader.

Fear may not be as sexy as Greed, but it will make you a lot more money.


james moylan said...

I have a web site where I give advise on penny stocks. and stocks under five dollars I have had much success over the years because I thoroughly research all my stock selections very carefully before I buy a stock. If their is anyone that is interested in these type of stocks you can check out my web site by just clicking my name. I would like to comment about penny stock promoters theirs definitely good reasons to not take advise from a web site that recommends stocks trading under 50 cents. Generally speaking although their are exceptions stocks trading under 1 dollar are usually bad investments. I have had great success over the years with stocks trading between 1 dollar and 10 dollars a share. I would like to suggest a stock that I like here it trades around 4 dollars a share the company is in the retail appliance business. the company is very profitable’ with much less risk than most stocks trading under 5 dollars this is an excellent company what I would call a diamond in the ruff’ any competent investment professional would have great respect for anyone that could find such a good company trading at only 4.50 dollars a share. I think the stock could get to 20 dollars a share over the next five years. the company Appliance Recycling Centers of America, Inc. symbol {ARCI}

penny stocks said...

I have a web site where I give investment advise on penny stocks and stocks under five dollars. I have many years of experience with these type of stocks. I would like to comment about all the hupla surrounding any stock that has anything in the world to do with social networking or smart phones. this is a bubble waiting to burst. I just sold all of my shares in vonage holdings corporation. I bought the shares in 2009 for 37 cents I just recently sold them for 5 dollars.


The market moves based on fear and greed.

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