Friday, July 01, 2016

Fear and Greed


KLCI down by 8 points ... window un-dressing?

I have been sideway ... watching ....

The FEAR of losing is greater than the GREED of profit ... with the V-shape recovery in a week!!

I have 8 years plus of experiences, of watching markets ... in daily basis. I have seen many rebounds ... seen many stocks goring-ed up kao-kao ... serious.

I have known the many strategies ... learnt many painful lessons in trying out many trading-instruments.

Until we have all these experiences, we could not know what real FEAR of losing means. Yes, we cut-loss ... in many of those "lousy" stocks that we stuck into ... we feel remorse, regretted that we have bought due to some tips or ... driven by our GREED.

Listen ... stock-markets is the place where 'wealth' transition taken place ... to those patient & know-how ... from many ignorant retailers like us.

Market is larger than us ... larger than large funds. Wipe-off. That is market.



CAPITULATION ... giving up, sell for huge losses ... and created panic in us.

DESPAIR ... Simply sad ... depressing as our performance was so bad that we will be looking around for help ... at a point, we will have those moments ...

EGO ... this is our main weakness. We thought we knew what we are doing ... but in actual fact, we do not know much. Market is too huge for anyone's comprehension.

FEAR ... it will always be inside us ... freight or fight. We will run to safety ... and will follow the herd ... the majority, the crowd.

GREED ... in us ... so much so that we want to profit as QUICK as possible ... in the way, quick-easy money. I was naïve too ... when I started to be in markets. GREED kills me many of times

HOPE ... we all hope and pray that the stocks we bought into will go our way ... many of times, when it does not, we are in despair ... putting hope in trading will definitely kill our emotion. We might get fed-up of hoping ... and quit.

IGNORANT ... well, most of us are ... if you are still believing in sure-win system or even those forums/bloggers ... to buy into stocks. If one is new in markets, we are too naïve and ignorant.

Yeah ... C to I for sharing.

Not many will listen ... not many will believe the 'power' of Fear & Greed. They said ... it is Demand&Supply ... but I would say ... all those generated from our EMOTION ... that we are all just very human ... we are clouded by GREED ... and then, FEAR kills us.

I am not any wiser than majority out there, that is for sure ... as I m only 8 yrs in markets. I m humbled by markets so many times ... that I could not even 'dare' to use the term novice ... yes, first 5 years ... you are newbie ... 5 to 10 years, you are novice.

In reality, trading is an EXTREME sports. haha ... it pumped our heart, we have cold sweat(at least we sweat, at times!) ... we ride the roller-coaster up&down ... then, some times ... the Niagara Falls dive happened to us!! Well ... at times, it is jump from the plane(gap down!).

I told many of my friends ... or those left my trading group to join me ... during market crash! Yes ... in 2012-2014 ... greed was in play. Today, many are more cautious in the trading, many still stuck inside. Wait till ... during crash ... we want to see how many still STRONG mentally, absorbing the pain of losing.

I can go on and on ... but tmr, I will share with few who will be attending my 1-2hours market talk about 'market crash preparations'. I will ... as always, mention about the FEAR and GREED.


I was reading few pages of Peter Yee's book this morning, the one related to 'stock-market'. The book is generally about 'money' or financial ...

Note : This is a good book and easy to read. Peter Yee is a well-known property-guru and I am glad that I knew him in person.

One of the most important advice given is : Be a contrarian.

What does that mean?

Quoting from Warren Buffett ... as always : Be greedy  when everyone is in fear .. BUY. Be fearful when everyone is in greed. SELL.

You and me ... read about this line MANY of times. We also read about how many investors telling us about it. To profit hugely, we need to be patient and GO AGAINST the crowd.

If we are not consistently being a contrarian ... HOW are we going to BUY HUGELY during market crash? It is near impossible as our FEAR of losing is greater than the GREED of profiting.


This is an interesting diagram ... and it is a FACT to most ignorant retailers. Serious. It is not funny, to me. It is pain ... a painful fact that many do not wish to talk about. But ... hey, I took one whole month of my e-learning time to discuss RISK and risk-management. Yet ... those are theories ... in practice, it is ... easier said than done.

Let me give one the most recent example : BREXIT ---  DOW dived from 18000 to 17000 level in 3 days and last night it rebounded back to 17930 level. Incredible stunt in a week!! Were you watching such a rare event? Have we wonder how FEAR and GREED in play? That is called bungee-jump ... and a week trip!

I have been catching many knives ... those blue-chips, they rebounded well. Those mid-cap might cut my fingers. Those small caps could burn our whole arms. I have experienced all three. Feel stupid, at times ... and reflecting back, not many people would dare to buy for technical rebound. It is ... easier said than done!!


Taken from : http://econintersect.com/b2evolution/blog1.php/2011/09/13/staging-the-european-crisis-and-the-phantom-of-rescue

Seen this F-G-H diagram? Most of us, yes ... if you have not, you must be new in markets. Welcome to largest legalised casino in Malaysia --- Bursa Malaysia.

Where are we now? Anxiety ... that is why I m nervous to take a technical rebound during recent Brexit.

I have basically prepared the plans for my stage #1 (before crash) and been continuing doing that now. Less trading giving me focus in reading more of my investment books --- to refresh my mind --- and sharpen my skills. Listening to experienced investors ... I could gather some wisdom.

Coffee-date : Next week, I will be meeting an experience investor and hope he will enlighten me with him wisdom. These 'old timers' are gems ... extremely rare. I treasured them and appreciate their sharing with me. Will write about the pointers.

Time to go for jalan-jalan ... with family.

Have a nice weekend and drive carefully if balik-kampung

TEH

1 comment:

Remnant 888 said...

Teh
Don't let the fear paralysed your trading. You've made some bad trades YET you have made some superb moves. Just keep at it. We all lose some but we'll gain eventually. Persistence my brother is the secret. Those who lost enormous amount in the crash of recent years but never quit or gave up eventually made up for the loss and beyond.

Brexit was bound to happen sooner or later and the aftermath will trigger economic losses to some nations but some will gain. So it kind of balances. I don't see how it would trigger a financial collapse. Mind you its not subprime mortgage of the movie BIG SHORT...

Brexit is a huge opportunity for trading in the perceived chaos that EU will disintegrate and collapse. And chaos and panic sometimes can be a friend of Traders.

Final note. It's too early to call market crash maybe market slowdown and recession. Depressing prices and monetary policy are wrecking havoc on plantations o&g and property sectors. And share prices tumbled.

I think there are instruments in place globally to absorb any financial shockwaves to prevent a recurrence of recent.
Anyway if a shakedown does come we will all know and be prepared.

Happy trading...