These two things can make or break your investing journey!
Can you guess what they are? They’re two sides of the same coin: Fear and greed.
One of my favorite quotes is from billionaire investor Warren Buffet. “Be greedy when others are fearful, and fearful when others are greedy.”
What does he mean by that? When everyone is afraid to buy, that’s when you should buy! Because the price is going to be low. And when everyone is rushing a stock and there’s a lot of hype, that’s when you should be afraid and run. The price is gonna be high. You already missed the best buying opportunity.
But the truth is, most people do the opposite. They let fear keep them from a good investment opportunity. And they let greed drive them towards an overpriced stock.
Picture this… the market has a downturn, and the value of your portfolio dips. Do you sell off everything and pull your money out in case it gets worse? If you said yes, that’s fear talking. Fear can push you to make irrational decisions, like selling off everything or avoid investing altogether.
But fear could be causing you to miss out on long term opportunities. Selling during a downturn literally locks in your losses. Yes markets go through rough patches, but over the long term, history has shown that it always recovers. So a down market is the perfect opportunity to take advantage of lower prices.
On the other side of the coin is greed. You want quick returns and you want a lot of it NOW! Being too greedy can also lead to poor decision making. It’s how you fall for scams or take unnecessary risks.
If someone approaches you saying they can double your money in a week, guaranteed… you might be tempted because you want those quick returns. But that’s also a guaranteed scam.
You might also chase after hot stocks or jump on bandwagons. But that’s not a good strategy to build long term wealth. You might even end up going all in on a stock, hoping for quick returns. But we know, putting all your eggs in one basket is a big no.
Instead of letting these emotions control your investing, focus on strategy, patience and building long term wealth.
Take my Investing for Beginners class to learn more and build your own investing strategy.