Wisdom on Value
Investing:
How to Profit
on Fallen Angels
|
Author: Gabriel
Wisdom
|
This book introduces the strategies on value investing. First of all, it introduces the doomed human nature in stock market as following:
The markets are moved by animal spirits and not by reason. Markets are just big groups of people competing to buy and sell items of value. And people are just big-brained animals in fancy clothes.
Animals, like humans, are driven to relieve pain and gain pleasure. They need to care and provide for their offspring, reduce or eliminate fear, and achieve a feeling of security.
It’s important to recognize that the traits of top investors run counter to the instincts of most human beings. (Your instincts will kill you in the stock market.)
The human nature want to buy what has already gone up and sell after steep declines. You are hardwired to avoid pain and seek pleasure – to sell when prices are plunging and buy when they are rising.
The herd mentality works for animals by providing protection, efficiency and even companionship. However, it pays to be a lone wolf in investing.
Human nature makes us place a premium on the familiar or on coveted items, which leads us to overpay for the hottest toy, book or collectible. Avoid too popular stock.
Emotion is overwhelmingly influential – the intellect finds logic to justify what the emotions have already decided.
For whatever reason, people don’t tend to think long term when making financial decisions. Perhaps it is human nature to want to get as much as you can as soon as possible, for immediate gratification.
You will find that the majority of market participants are focused on the present, the here and now. They are fearful and hesitant when times are bad, and complacent and overconfident during periods of prosperity.
The markets are moved by animal spirits and not by reason. Markets are just big groups of people competing to buy and sell items of value. And people are just big-brained animals in fancy clothes.
Animals, like humans, are driven to relieve pain and gain pleasure. They need to care and provide for their offspring, reduce or eliminate fear, and achieve a feeling of security.
It’s important to recognize that the traits of top investors run counter to the instincts of most human beings. (Your instincts will kill you in the stock market.)
The human nature want to buy what has already gone up and sell after steep declines. You are hardwired to avoid pain and seek pleasure – to sell when prices are plunging and buy when they are rising.
The herd mentality works for animals by providing protection, efficiency and even companionship. However, it pays to be a lone wolf in investing.
Human nature makes us place a premium on the familiar or on coveted items, which leads us to overpay for the hottest toy, book or collectible. Avoid too popular stock.
Emotion is overwhelmingly influential – the intellect finds logic to justify what the emotions have already decided.
For whatever reason, people don’t tend to think long term when making financial decisions. Perhaps it is human nature to want to get as much as you can as soon as possible, for immediate gratification.
You will find that the majority of market participants are focused on the present, the here and now. They are fearful and hesitant when times are bad, and complacent and overconfident during periods of prosperity.
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