How to avoid wrong investments
Have you ever wondered, why do people buy expensive shares and sell cheap? This is due to the inherent lack of financial intuitions. Think this way. Would you like to invest some resources:
* And how do you feel when the last two years S&P index fell by 70%? If someone you are urged to buy shares you will laugh at him.
Looked quite different if you decide you had to buy shares instead of such a car. If the price of cars fell by 70% (although it is still just as good a car) once you reach for your wallet.
Our problem boils down to the question: why we are afraid to buy cheap shares, and is fond of buying overvalued?
Gregarious behavior is very highly developed and that is what they told us to buy when everyone was buying. Sell, because all they sell.
Unfortunately (or perhaps fortunately) the majority of the stock market loses, and as you probably already guessed their money goes into those who belong to minorities. This does not mean absolutely that you should always act against the crowd. This means that its decisions should take alone. Ignoring what others are doing. At the beginning is very difficult to turn off the emotions because it comes with the help of our trading system.
This is nothing but a set of principles to be guided in our decisions. It must be clear rules, so that our best chance adviser does not become the voice of a neighbor or a recommendation of a pseudo-analyst. The principle of using the transaction system is simple. If we have set of rules and all them points to buy buy it.
In the future I will explore that topic. Key point to understand from this article is to analyze carefully all your decisions and do not make decisions in rush.