There’s only one reason to invest right now
Benjamin Graham described Mr Market as a manic-depressive character.
It quotes share prices cheaply when it is depressed and expensively when it is exuberant.
Graham hoped that this character could help the investor think as a third person - getting him detached from the market situation so that he can make clear headed decisions.
But it hasn't helped. Investors emotions are still entwined with the movement of share prices even after decades since Graham wrote about Mr Market.
Just two years ago, the market was rallying strongly after a quick Covid-induced crash.
Investors were full of optimism as markets climb. There was an omnipresent thrill of making money. We often see that exuberance in social media as investors were sharing how they have made a killing in the markets.
One could feel silly if he does not participate as his peers were making money so quickly. So he jumps in too. Anyway what could go wrong?
Fast forward to today, it is hard to find an optimistic investor as most investments have sunk. There is zero thrill in the markets right now - "don't even talk to me about it" is an apt description.
Few souls dare to invest, worrying about what is cheap can get cheaper. Pointing to the myriad problems about inflation, interest rates, recession, war and what not.
The key reason is not the bad news. It is because markets are falling. There are always good and bad news all the time, it is just that we focus on the good when we are optimistic and the bad when we are pessimistic.
Similarly, we have the tendency to invest in risky assets (stocks and crypto) when we are optimistic and flight to capital-protected assets (fixed deposits) when we are pessimistic.
That said, there are perennial pessimists. They are those who aren't lured by the lucrative gains during a bull market and just kept saving instead of investing.
The flip side is true - you have to be a long-term optimist if you want to invest money. Like what Morgan Housel wrote out his investment mission,
"I am a passive investor optimistic in the world’s ability to generate real economic growth and I’m confident that over the next 30 years that growth will accrue to my investments."
If you don't believe in a brighter future you will never invest. If you are so pessimistic about the world ending you would save the money in the biscuit tin (not even in a bank because it will collapse).
Even if you are waiting for a good time to enter perhaps you have a sense of where the bottom is, you are still an optimist - because you believe the market will go up in the future to give you a profit. Else why invest?
Be greedy when others are fearful is easier said than done.
There are 10,000 reasons why you should not invest now. There is only one reason - you are a long-term optimist.
It quotes share prices cheaply when it is depressed and expensively when it is exuberant.
Graham hoped that this character could help the investor think as a third person - getting him detached from the market situation so that he can make clear headed decisions.
But it hasn't helped. Investors emotions are still entwined with the movement of share prices even after decades since Graham wrote about Mr Market.
Just two years ago, the market was rallying strongly after a quick Covid-induced crash.
Investors were full of optimism as markets climb. There was an omnipresent thrill of making money. We often see that exuberance in social media as investors were sharing how they have made a killing in the markets.
One could feel silly if he does not participate as his peers were making money so quickly. So he jumps in too. Anyway what could go wrong?
Fast forward to today, it is hard to find an optimistic investor as most investments have sunk. There is zero thrill in the markets right now - "don't even talk to me about it" is an apt description.
Few souls dare to invest, worrying about what is cheap can get cheaper. Pointing to the myriad problems about inflation, interest rates, recession, war and what not.
The key reason is not the bad news. It is because markets are falling. There are always good and bad news all the time, it is just that we focus on the good when we are optimistic and the bad when we are pessimistic.
Similarly, we have the tendency to invest in risky assets (stocks and crypto) when we are optimistic and flight to capital-protected assets (fixed deposits) when we are pessimistic.
That said, there are perennial pessimists. They are those who aren't lured by the lucrative gains during a bull market and just kept saving instead of investing.
The flip side is true - you have to be a long-term optimist if you want to invest money. Like what Morgan Housel wrote out his investment mission,
"I am a passive investor optimistic in the world’s ability to generate real economic growth and I’m confident that over the next 30 years that growth will accrue to my investments."
If you don't believe in a brighter future you will never invest. If you are so pessimistic about the world ending you would save the money in the biscuit tin (not even in a bank because it will collapse).
Even if you are waiting for a good time to enter perhaps you have a sense of where the bottom is, you are still an optimist - because you believe the market will go up in the future to give you a profit. Else why invest?
Be greedy when others are fearful is easier said than done.
There are 10,000 reasons why you should not invest now. There is only one reason - you are a long-term optimist.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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RIPPER : A good mantra to remember is BUY RED, SELL GREEN!
For some reason it seems like The common investor has the psychological tendency to see only focus on the stocks with the largest gains on that day and jumps in. When most are cruising watchlist, it is the green tickers they immediately start driving their focus.
Me? I do quite the opposite. When I am looking up and down my watchlist and I see a red -20% stock, that’s the first chart start examining, reading it for its future potential. I guess I have a tendency to first examine any extremes in either direction…..But I never jump into a trade that has already climbed 100% that day without close examination.
Point is, Never chase green…. you’ll end up running in circles.
faithful Axolotl_236 : Alvin chow.. Mike Hopkins here...I thankyou for your thoughts and sharing your view of reason. nice to meet you sir. on this platue.