Warren Buffett, the greatest investor of our generation should be in everyone's list of finance idols. Although the Oracle of Omaha is worth at least USD50 billion, he has pledged 99% of his net worth to philanthropic causes. He is also well known to have strong ethics - having owned many companies but only making the decision for mass layoffs once during his first years of investing. He also does his own tax returns every year. Buffettology is the teachings of this great finance mind.
He recently quoted "There is not comparison between fear and greed. Fear is instant, pervasive and intense. Greed is slower. Fear hits." and this is in relation to his classical rule "Be fearful when others are greedy, and be greedy when others are fearful".
There is two parts to this. Firstly his advice is to buy when others are selling. This is obviously after you have done your research such as reading the financial statements of the company and knowing their products are what is going to sell in the long run. And also all other considerations to take into account, which would take too long for me to explain in this reading. With that philosophy, you are getting your stocks at a bargain of what it is selling for.
The next is about your emotions when buying or selling. So when the market does not look so good, people will always panic and sell without rationalizing. This will definitely cause loses one way or another. For instance, you would be selling at a discount or you will be paying fees for selling and again for buying into it once the scare has subsided.
Hopefully these will get you thinking of what would you do when faced with both situations.
He recently quoted "There is not comparison between fear and greed. Fear is instant, pervasive and intense. Greed is slower. Fear hits." and this is in relation to his classical rule "Be fearful when others are greedy, and be greedy when others are fearful".
There is two parts to this. Firstly his advice is to buy when others are selling. This is obviously after you have done your research such as reading the financial statements of the company and knowing their products are what is going to sell in the long run. And also all other considerations to take into account, which would take too long for me to explain in this reading. With that philosophy, you are getting your stocks at a bargain of what it is selling for.
The next is about your emotions when buying or selling. So when the market does not look so good, people will always panic and sell without rationalizing. This will definitely cause loses one way or another. For instance, you would be selling at a discount or you will be paying fees for selling and again for buying into it once the scare has subsided.
Hopefully these will get you thinking of what would you do when faced with both situations.
