How should I understand “Fearful when others are greedy and greedy when others are fearful.”? Is...

How should I understand “Fearful when others are greedy and greedy when others are fearful.”? Is this necessarily true?

Expert Solution

The quote “fearful when others are greedy and greedy when others are fearful” is a quote that tells and advices investors as to what their investment strategy should be. When other investors are greedy they will buy shares with a sense of optimism. On the other hand when others are fearful they will have a pessimistic approach to the market.

The quote suggests that when people are fearful and when the mood of majority of investors is filled with pessimism, then one should consider that as the best time to buy. Similarly during times of unwarranted optimism investors should be greedy and should look to prudently offload their stakes.

Yes, this is true in most of the situations in the real world of share market and trading. This is because when investors are bullish then asset valuations become very high. The opposite scenario also holds true in the real world. When majority of the investors are bearish then asset valuations are low and hence this is the appropriate time to get greedy and buy stocks at attractive valuations so as to earn handsome appreciation in their investments.

jeff jeffy answered 2 years ago

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