Investing Psychology
- Staff Curator
- Finance
- 19 Jul, 2020
- 19 Jul, 2020
- 2 min read
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〝When the stock is up 30%, don’t feel 30% smarter, because when stock is down 30% a month, it’s not gonna feel so good to be 30% dumber.〞 ― Jeff Bezos
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You don’t want to buy penny stock Rs 10-20 bucks vs quality worth Rs 2000. You don’t want to sell your gold to buy silver.
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Signs of Top and Bottom in the market
Top Signs Bottom Signs 1 Large number of IPOs 1 No mergers and acquisitions 2 Rapidly Rising Prices 2 No IPOs 3 Excess Leverage 3 No new money for venture capital 4 Easy availability of Credit 4 Low Price/Sales & EV/EBITDA multiples 5 Over-optimistic front covers of Newspapers & Magazines 5 Many companies trading below book value 6 Very high trading volumes 6 Very low P/E multiple 7 Historically high P/E & EV/EBITDA multiples 7 Central banks eased for 6 to 12 months 8 Art & Luxury markets booming 8 Recession declared officially, news is stale 9 Financial press and financial TV become favorites 9 Previously favorite sectors are hated 10 ”This Time is Different” Declared 10 Credit only available to high-quality-borrowers 11 Amateur investors move to equity asset class 11 Investors are cautious and out of the market 12 Innovation leads to euphoria 12 Negative front covers of newspapers and magazines 13 Social proof leads to herding 13 Negative and depressed consumer sentiment
