FEAR vs GREED – 

The DOW was down 469 points yesterday. All that selling was motivated by an emotion that’s one of only two market movers. On Wall Street there is Greed and there is Fear. In fact, there are indexes that measure both. Check it out. Yesterday’s selloff was motivated by FEAR through and through. The Fear index reads EXTREME FEAR right now. Oh migh! What’s an investor to do?  Sell all of her shares and run for the hills?

Fear and Greed are just opposite sides of the same coin. We jump into the market when all the stocks on the screen are green. Happy Days are hear again, the skies above are clear again… That’s Greed. We’re just grabbing our piece of the pie. Prices go up further, we load the truck up with more shares. This is our ticket to Easy Street! Then, things turn around and stocks start to slide. Suddenly all the symbols are red on the screen. We hold on expecting for things to turn around. But, our stock continues to slide.  We’re down nearly 10% percent from our initial investment and yet, we still hang on. That’s still greed. Another down day, down another 5%.  We pull the trigger and hit the sell button. SELL, SELL,SELL! Get me out, no matter what the price. That’s FEAR.  

Whenever there is market volatility like we have these days, one day the market is up, the next it’s down, you know that FEAR and GREED are at play. These are the times that smart investors take profits on those up days and stay on the sidelines for awhile.  Cash is king.  You’ll never go broke because you have too much cash in the bank. Watch out below! This market has further to fall. There’s gonna be a whole lot of FEAR in the air this autumn.  Can’t wait…