The cycle of market emotions

“Buying low and selling high is intuitively rational. But, often, that’s not what people actually do. There’s overwhelming evidence that many people seem to be hardwired to do just the opposite: to buy an investment after it has already appreciated only to sell the same investment if it goes down in price.

So why do people seem determined to do exactly the wrong thing – to sell when they should be buying, and to buy when they should be selling? It’s because most people make money decisions based on emotions rather than logic.

The two dominant emotions that drive money decisions are fear and greed. These are not good mental states to be in when making decisions about your wealth.”

Brad Brain_ The cycle of market emotions _ Alaska Highway News

This article was posted in All Columns, Risk Management.
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