Greed and fear dominate markets
“Markets are driven by greed and fear,” is something that analysts often tell; the basic premise is that fear prevents investors from buying when the stock has reached a low level while greed prevents the investor from trading when the stock price is high.
The recent work related to GameStop is a good example of how greed will improve for many investors. Few will trade for fear of missing out on continued stock growth and will end up losing much of what they gained + their first investment when the company’s stock price starts to undoubtedly happen.
It is a matter of investors who use their commonsense. It is common for young people to be attracted to this type of stock; I think that was probably because the older investors were there and they were doing that and going in the right direction.
Fear also prevents many investors from buying stock when the price has dropped so that a prudent investor can take advantage of this fear by buying stocks at a lower price. It is advisable for investors to check the stock market table in the newspapers and the figures to be noted are the high and low annual prices. This will give you an idea of where the stock is.
If you are investing in an online sharing platform that allows you to withdraw food from the market you can say you have bought shares in the same company every two weeks. That way if the value of the shares is low you should at least buy the shares at a lower price.
But there are some stocks where this rule may not apply.
GameStop gaming company has been in the news recently (January 2021) due to rising share prices and as more investors jump on the bandwagon the price of its shares has risen above its real value. It is still a while before its share price goes down but who knows when that will be. It is likely that many investors will jump the ship and speed up its slide.
So is GameStop a short-term, mid-term, or long-term investment?
In my opinion, none of the above; it is a game of guessing when you use your salary of your choice. If that happened then it was okay and if the investment turned to custard, it was money you could not lose anyway.
In your opinion, that’s the money you could spend on alcohol, nights, holidays, lotteries, satellite TV, or whatever; if you lose your money nothing bad is done.
The media does not give a full story when they report that someone lost an X-dollar amount in the stock market when the company’s stock price plummeted. The investor may have $ 1,000 shares in xyz but you may only pay $ 100 but it will be reported that $ 1,000 is lost.
It is up to the investors to do their homework and think about what they are doing because in the end it is your money you are wasting.
I cannot stress this enough; do not use the following funds to purchase shares on GameStop.
* Household income
* Money saved to buy a car
* Money is set aside for your child’s education
* Retirement allowance
* Emergency budget.
The Games Stop bubble will explode. It has a short lifespan so buy only shares in this or other similar investments with the money you can afford to lose.
After all you would not go to Kumara races with house deposit money.