Buy Fear And Sell Greed

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Buy Fear And Sell Greed

seekingalpha2022-05-13

shapecharge/E+ via Getty Images Buy or add common shares on surprise socioeconomic events and market fears. Sell or reduce the shares on surprise company events and market greed. The intelligent value...

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Guardian_J
·2022-05-14
Wao
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jimcm
·2022-05-13
Good article
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Sell or reduce the shares on surprise company events and market greed. The intelligent value...</p>\n\n<a href=\"https://seekingalpha.com/article/4511196-buy-fear-and-sell-greed\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4579","symbol_name":"人工智能","start_time":0,"source_url":"https://seekingalpha.com/article/4511196-buy-fear-and-sell-greed","article_id":"2235411368","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2235411368","pubTimestamp":1652454000,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"shapecharge/E+ via Getty Images Buy or add common shares on surprise socioeconomic events and market","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4579":"人工智能","BK4550":"红杉资本持仓","BK4574":"无人驾驶","BK4505":"高瓴资本持仓","BK4573":"虚拟现实","BK4559":"巴菲特持仓","BK4581":"高盛持仓","BK4512":"苹果概念","BK4501":"段永平概念","BK4170":"电脑硬件、储存设备及电脑周边","BK4554":"元宇宙及AR概念","BK4532":"文艺复兴科技持仓","AAPL":"苹果","BK4515":"5G概念","BK4553":"喜马拉雅资本持仓","BK4571":"数字音乐概念","BK4534":"瑞士信贷持仓","BK4507":"流媒体概念","BK4576":"AR","BK4533":"AQR资本管理(全球第二大对冲基金)","BK4575":"芯片概念","BK4566":"资本集团","BK4527":"明星科技股"},"translate_title":"买恐惧卖贪婪","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AAPL":1},"content_text":"shapecharge/E+ via Getty Images Buy or add common shares on surprise socioeconomic events and market fears. Sell or reduce the shares on surprise company events and market greed. The intelligent value investor purchases a slice of a stable company with solid fundamentals when the market retreats based on fear. Then divests or reduces the holding when the market gets greedy and overbuys the stock, despite weaker fundamentals or an inflated stock price. In other words, only when microeconomic events erode the company's financial strength or the demand for its products and services does a sell order become imminent. Buy on fear, presuming the share price is attractive, and sell on greed, assuming the stock price is above your cost basis. Unfortunately, erratic corrections such as the COVID-19 coronavirus pandemic notwithstanding, the market prefers to entertain the purchase of attractive fundamentals at high prices and narrow margins of safety. As a result, in the later stages of the post-Great Recession epic bull market, our family portfolio had evolved into more of a watch list than a buy list. Market Predictions Are A Fool's Game When the market timer is wrong-the probable outcome-in predicting a surprise market, industry, or company event, substantial assets are lost because the trader is too long or short. On the other side of the trade, the patient investor is prepared to take advantage of the surprise occurrence by allocating planned cash reserves for new or increased positions in the shares of companies with solid fundamentals. The disciplined investor takes advantage of depressed prices from the indiscriminate macro event. These surprise incidents, any tragedies notwithstanding, trigger a contrarian's opportunity for the thoughtful individual investor. For example, investors who held, added to, or initiated quality positions following the market crash of 1987, during the dot-com bear market of 2000-2002, or the run-up after the Great Recession of 2007-08 profited from subsequent booming portfolios. The market meltdown from the coronavirus pandemic produced similar opportunities for bargain hunters in March of 2020. A few did predict these events, and perhaps each benefited from a stroke of luck. But unfortunately, many investors reacted by selling depressed securities in the aftermath, and more than a few of these victimized portfolios have yet to recover. Nevertheless, the investor who predicts an impactful market, industry, or company event becomes intoxicated by the lucky call and begins to base their investing philosophy on the sudden perceived ability to foresee future events. Such inebriation of financial intellect induces the proverbial gazing into the crystal ball, encompassing a false state of being. The luck soon runs out with poetic justice, as does the principal on their investments. Buying Is Exhilarating-Selling Is Exacerbating An overlooked challenge for any investor is when to sell a holding. Execute a sell order to deliver profits with a more proactive and less reactive well-thought-out decision process. The occasional it was a good idea at the time investment sometimes leads to unloading the persistent underperforming equity to cut further losses. The fundamentals-driven value investor sells or reduces a slice of the business when it no longer supports the investment thesis. There was a time when I sold the stocks of companies as much as I bought them. The share prices of many of the sold-out companies are higher today. Selling a stock merely out of fear of current or future events often works against the investor's best interest. Just ask Apple (NASDAQ:AAPL) shareholders-including yours truly-who went bearish based on Wall Street analyst forecasts following the death of its founder and icon Steve Jobs in 2011. Hence, it is an obligation as the portfolio's innkeeper to write follow-up alerts on the common shares held as evolving fundamentals and metrics dictate. It is important to remember that long-term results are the best barometer of equity performance to the disciplined, individual investor. You don't need to chase quarterly performance, as do many of the players on Wall Street and their hordes of followers on Main Street. For this reason, patience is the value investor's best friend. Sell To Take Profits-Not Quell Emotions I sell less often nowadays, having learned that repeated buying and selling support the Wall Street fee machine more than positive returns from our family portfolio. For example, I had sold out just three stocks from the portfolio during the post-Great Recession bull market. Murphy's Law had two up significantly before the COVID-19 coronavirus correction. When buying enduring quality companies at reasonable prices, there are fewer incentives to sell than to perhaps finance an essential milestone in life. Take profits on a long-held common stock to finance a home purchase, pay college tuition, sponsor a wedding, underwrite a hobby, capitalize a business start-up, or fund a comfortable retirement. Your approach to investing in common stocks must be cognitive. Besides the appropriate celebration or brief pity party, there is little room for feelings and emotions in successful investing. During the epic 2009 to 2021 bull market, individual securities continued to show attractive fundamentals and enticing dividends; however, prices were steep concerning acceptable valuations and margins of safety. Regardless of how we measured the subjective estimation of intrinsic value, the stock prices appeared stretched. Perhaps the market would keep climbing, as it did for some time. But whoever knows? Counter to the heightened impatience in the Wall Street arena, practice patient risk management by waiting for prices of quality stocks to drop to acceptable levels. Avoid predicting specific macro events you have limited control over, and leave the erratic behavior to speculators who own the equities or hold the corporate bonds of companies with suspect business models. When the surprise event does happen, it is often a buying opportunity for the common shares of quality companies that prevail despite the temporary economic or industry downturn. The disciplined value investor is inclined to wait for the economy's macro- or company micro-events to deflate the stock to a reasonable, if not bargain, price. Growth markets and fads come and go; therefore, owning quality at a reasonable price is the most straightforward approach for retail-level stock pickers to potentially outperform the market or reach and exceed their personal financial goals. Fear And Greed As Pricing Mechanisms This article supports a value investment theory of becoming greedy from market fear by buying when a surprise macro event affects an entire economy or sector and being fearful of market greed by selling on the surprise micro event limited to a company or industry. Widely credited to Warren Buffett, the buying fear and selling greed metaphor produced the most famous value investor of our time. The lesson reminds the independent investor to stop market timing or stock trading and start investing or divesting as macro and microeconomic conditions dictate. Such discipline requires a contrarian's retreat from the crowd. Instead, the thoughtful value investor sticks to the tried-and-true approach of researching the fundamentals of the targeted business to determine the potential level of ownership worthiness. And, if warranted, measures the valuation multiples of the underlying stock to decide whether to initiate, add to, maintain, reduce, or sell the holding. The patient value investor is steadfast in waiting for random macroeconomic events that often lead to fearful retreats from stocks on Wall Street. Then, as prices drop to attractive valuations, sift your watchlist for great companies with sound fundamentals trading at attractive multiples that offer sufficient margins of safety. Alternatively, add dry powder, such as FDIC-insured cash, to your present holdings. Your portfolio's first and seventh ideas are perhaps a better value than a new investment opportunity presented by the market. And when greed prevails-affecting the valuation or the fundamentals of a single holding-consider reducing or eliminating your ownership in the position at a profit. On the other side of the investment, if the microeconomic event or trader-induced fears render valuations with wider safety margins, purchase a new stake or add to the position. In the wake of fear and greed, the value investor reemerges to take advantage of rare opportunities to initiate new positions because quality enterprises seldom trade in the bargain-basement bin except in market downturns. Then, as the bull market tide goes out, the junk equity holders are left swimming naked, as famously suggested by Buffett. Suppose you buy a quality company at a favorable price and the enterprise's value proposition remains intact. Then, why sell other than to fund new opportunities or finance an upcoming milestone in life? Buy and hold forever is okay, too. Again, the value-based long-view investor has the temperament of a contrarian. Copyright 2021 and 2022 by David J. Waldron. All rights reserved worldwide.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":9067729505,"gmtCreate":1652514158307,"gmtModify":1676535115375,"author":{"id":"3577512169946317","authorId":"3577512169946317","name":"Guardian_J","avatar":"https://static.tigerbbs.com/d5732d3790ba7ded4910ae093423ed15","vip":1,"crmLevel":7,"crmLevelSwitch":1,"idStr":"3577512169946317","authorIdStr":"3577512169946317"},"htmlText":"Wao","listText":"Wao","text":"Wao","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9067729505","repostId":2235411368,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9067637839,"gmtCreate":1652452064221,"gmtModify":1676535103644,"author":{"id":"4089870511727540","authorId":"4089870511727540","name":"jimcm","avatar":"https://static.tigerbbs.com/c32942224c09c28bda012467a9e0b80c","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"4089870511727540","authorIdStr":"4089870511727540"},"htmlText":"Good article&nbsp;","listText":"Good article&nbsp;","text":"Good article","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9067637839","repostId":2235411368,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":4,"commentSize":2,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}