Many investors automatically enter a “waiting mode” whenever negative market news breaks. What are they anticipating?
The market is about to crash! This is because they think investing is as simple as buying low and selling high. But why do the majority of people fail to even do that?
Several reasons exist:
It’s possible that a market hasn’t reached its bottom yet, so investors choose to wait when they have the funds to safely invest in it. When the market reaches its lowest point; Since money rarely stands still, it has already been used for other things. If it isn’t going to an investment, it will usually be spent on unnecessary things like repairs, get-rich-quick schemes, and other “life dramas.”
Investors who are accustomed to waiting until a market downturn before taking action typically do so out of either a fear of losing money or a desire to gain more. Let’s examine how each one affects things:
They are less likely to enter the market when it reaches rock bottom because of the negative news if their behavior was motivated by fear of losing money. How can you expect them to have the courage to act when the news is really bad if they couldn’t when it was less bad? As a result, they usually miss out on the bottom.
They are more likely to find other “get-rich-quick schemes” to put their money in before the market hits the bottom, as their money won’t be around to invest by the time the market hits the bottom if their behavior was driven by greed in the hope of making more money on the way up when it reaches the bottom. As a result, you will notice that get-rich-quick schemes are typically heavily promoted during times of negative market sentiment due to their ease of capturing investor funds.
A lot of the time, something bad leads to other bad things. The majority of their time will be spent looking at all of the bad news to support their decision, as people who are afraid to enter the market when their capacity permits it will do so. Because they view any upward movement in the market as preparation for a subsequent, larger dive the following day, they will not only miss the bottom but also the opportunities on the way up.
As a result, I’ve noticed that most people who are too greedy or afraid to enter a market when it’s slow have rarely been able to make money waiting. When there is very little negative news left, they typically end up getting into the market after it has had its bull run for far too long. However, this is frequently the time when things are overvalued, allowing them to enter the market and then being slaughtered on their way down.
So, my advice to our customers is to start with your own internal factors, check your own track records, and determine whether or not you can afford to invest. Determine whether you can safely invest regardless of the market or other external factors:
If the answer is yes, then you should go to the market and look for the best price available at that moment;
Wait if the answer is no.
Sadly, the majority of investors act in the opposite direction. They end up wasting time and resources within their capacity as a result of their tendency to let the market—an external factor—decide what they should do.
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