90% of small investors lose $; why do people buy high after stocks run, yet are scared to buy when things go down? Shouldnt we be more excited to buy when stocks go 'on sale' . I have never understood this.
2006-06-21 03:08:52 · 7 answers · asked by Anonymous in Business & Finance ➔ Investing
I don't get it, either. When things go on sale at the supermarket, everyone goes to get stuff, so why isn't it the same for the Stock Market? Beats me. That sheep thing is about right.
2006-06-21 04:04:48 · answer #1 · answered by Josefina R 2 · 0⤊ 3⤋
It's called hype - those people are sheep, and they usually get slaughtered.
It's a lot more than buying a stock that goes "on sale". You have to ask yourself why the stock price went down. That requires analysis - if the company has good financials and a leading product and simply went lower because of some hyped up news - then great, but maybe that stock is headed for zero. Due Diligence is necessary... but above all, don't take stock advice from a site like Answers - what the hell does Smiddy know about the price of eggs after all?
2006-06-21 10:12:43 · answer #2 · answered by Smiddy 5 · 0⤊ 0⤋
I don't know so much if it's being sheep, because a philosophy I have heard followed which on occasion I have endeared is "buy on support, sell on decline" While this is a philosophy that goes against the "buy low sell high" total ideology we all cling to, it still allows for some pretty nice profitability-provided that you buy "into a run" and not at the top--but if you do your homework, this could make you some nice little profits. It's worked well for me, although I still get more intrinsic value over buying into a stock that looks like a diamond in the rough that pays off long-term....
2006-06-21 11:03:54 · answer #3 · answered by illini_r_1 2 · 0⤊ 0⤋
There are essentially 2 emotions on the market: fear and greed.
Greed drives them to buy as stocks run up. Fear keeps them from jumping as stocks slide. Just human nature at work.
2006-06-21 11:12:47 · answer #4 · answered by VinTek 7 · 0⤊ 0⤋
if the price goes up you'll have a much better chance that the prices will rise even more - then to have a turn around when the prices are falling....
you just gotta know when you got to get out - but even the guys who sit in front of reuters/bloomberg (stock exchange computer system) have a hard time knowing when to jump off.
if i only knew.....i would not be working anymore....l
2006-06-21 10:13:39 · answer #5 · answered by 42 6 · 0⤊ 0⤋
absolutely. it's human nature to buy when things look/feel/seem good and not to buy when things seem bad.
since the beginning of the stock market there's been ups and downs. if you have the fortitude to buy stocks when the market is down, you'll probably make some money.
2006-06-21 10:16:40 · answer #6 · answered by gjpull 1 · 0⤊ 0⤋
Sheep exactly. Sheep jumping on the band-wagon.
2006-06-21 10:14:52 · answer #7 · answered by Sam K 1 · 0⤊ 0⤋