Greed and Fear Within the Share Market
Greed and fear rule the markets
“The markets are driven by greed and fear,” are some things we are often told by financial commentators; what this essentially means is that fear prevents investors from buying when the share price has reached a coffee point while greed prevents an investor from selling when the share price is high.
The recent activity concerning the gaming company GameStop may be a perfect example of how greed will get the higher of tons of investors. Few will sell for fear of missing out on the continual rise of the stock and can find themselves losing tons of their gains + their initial investment when the company’s share price runs its course which it undoubtedly will.
It is a case of investors using their commonsense. It tends to be the young who are interested in this sort of stock; i feel probable because the older investors are there and have done that and have gone for a more conservative approach.
Fear also prevents tons of investors from buying a stock when it’s the price has bottomed out so an astute investor can cash in of those fears by purchasing shares that have dropped in price. it’s good for investors to see the share market table within the newspapers and therefore the statistic to notice is that the high & low price of the year. this may offer you a thought of where the stock is at.
If you’re investing through a web share platform that allows you to administration money into the markets then you’ll say purchase shares within the same company every fortnight. That way when the share price is down you’ve got a minimum of bought shares at the lower cost.
But there are just a few stocks where this rule might not be applicable.
The gaming company GameStop has been within the news tons lately (January 2021) thanks to the rising share price and with numerous investors jumping on the bandwagon its share price has been inflated well above its true value. it’s only a matter of your time before its share price slides but who knows when which will be. it’s likely that tons of investors will jump ship hastening its slide.
So is GameStop a short-term, medium-term, or long-term investment?
In my very own opinion, it’s none of the above; it’s more a speculative play where you employ your discretionary income. If it comes off that’s fine and if the investment turns to custard, well it had been money you’ll afford to lose anyway.
By discretionary income, that’s money you’d have spent on alcohol, nights out, holidays, the lottery, satellite television, or whatever; if you lose your money there’s no harm done.
The media doesn’t give the complete story once they report that somebody lost X amount of cash on the share market when a company’s share price bottomed out. An investor may have held $1,000 worth of shares in an xyz company but may have only paid $100 for them yet it’ll be reported that $1,000 was lost.
It is up to investors to try to do their homework and think and believe what they’re doing because at the top of the day it’s your money you’re twiddling with.
I cannot stress this enough; don’t use the subsequent funds for purchasing shares in GameStop.
*House deposit money
*Money stored up to get a car
*Money put aside for your child’s education
*Money put aside for your retirement
*Money put aside for emergencies.
The Games Stop bubble will burst. it’s a brief lifetime therefore only purchase shares during this or other similar speculative investments with money you’ll afford to lose.
After all, you’d not attend the Kumara races with the house deposit money.