Rational Behaviour In Stock Investing: Some Practical Points
Investors many times take unnecessary risk. They tend to buy
stocks pricey due to fear of losing opportunity and being left out of
the rally. But why should at all investors rely on rally? This is wrong
approach. You buy first and then let the
markets justify it for you. If you have invested right it will eventually
come up. Remember: Value investing always
beat everything.
Always wait if you are not
finding any value picks. Remain on cash. Remember your investment would only
reap returns if you follow your value-investing strategy. And otherwise not. So
then why invest when you are not sure, and it is like taking unnecessary risk?
If some stocks are going up
today and you don’t own many of them or most of them, so what? They were the
very stocks that were not going up in past while others were. So you thing to
shift to the rising stocks or some others stocks because your stocks are not in
the rising or 52-week high list is not rational thinking. They will be some
day. You cannot predict it. Also see by how much volume this whole lot of
mid-cap and small-cap stock are rising. How much is the market float. Many
stocks rise with thin volume and in a way to benefit a very few who are on the
inside rather than the general investors community like you and me or our
friends. Just ask yourself that looking at the given volume or sudden erratic
rises how many could have been able to earn out of it? How many could have
taken position before not many day? This
kind of rational thinking will help you overcome your fear of losing
opportunity and being left-out of the market or that your strategy is not right
or thoughts that your picks are wrong and so on.