Warren Buffett is a well know name in Stock Market world. Everyone admire him and consider one of the best investors. Because of great investment decisions, Warren Buffett is now among the World’s Top 10 Richest Persons.
If we try to analyse the quotes said by Warren Buffett on stock market investing, we can learn a lot of things. Every quote of him describes something special about how market works.
From his various investing quotes, one such interesting quote is “Be fearful when others are greedy and be greedy only when others are fearful”
Today, we are going to analyse what is the meaning of quote and things we can learn from this famous quote of Warren Buffett. To make it easy, i have divided this quote into two parts.
First One is ” Be fearful when others are greedy ” and second one “Be Greedy when others are fearful”.
In this article, we are going to discuss on the first part i.e ” Be fearful when others are greedy”.
So, let’s learn some important things about stock market from the first part.
Meaning of “Be fearful when others are greedy”
Warren Buffett says he always try to remain fearful when others are greedy. From fearful, he mean to say be cautious about stock markets and don’t remain too much invested when others are greedy.
Why?
When investors turns greedy on something, the price may unnecessarily start trading at higher levels.
Investors will not book profits, don’t take exit, buy more and more and neglect what is the Right price of the asset.
On any day, if any negative news came regarding that stock or negative development took place for the whole stock market, higher price would become difficult to sustain and can trigger big sharp fall.
So, when others are too much bullish on something, that may not be a good signal unless there are really some strong reasons to support prices.
When others are greedy, we have an opportunity to take exit at higher levels!
Next learning from this part of quote is
When most of the investors are greedy on something, we have an opportunity to take exit at higher price.
“Prices that comes during rally in stocks may hardly come again soon“
When others are too much greedy, we should become fearful regarding our investment and lighten our portfolio.
By doing this, we can take advantage of the higher price (made because others are greedy) and safeguard us from any big downfall. When price for something is too much high, downfall can also be higher.
When others are greedy, someone may use that time to dump its shares!
If we remember this quote and use it wisely, we can avoid getting trapped in stock operators games too!
“Earning money from stock market is usually a game of picking right stock and thereafter maintaining patience”
When an investor finds it difficult to maintain patience, in search of instant money, he/she may start investing in those stocks which are rising by good percentage everyday. And this thing make them greedy at wrong time.
When a stock become quite popular among investors (primarily due to rally in shares), someone may use that opportunity to dump their shares!
Higher demand by investors can help operators to dump their shares at higher levels without bringing any big crack in share price.
So when others are turning greedy on something primarily because price is continuously going up, that time, we may need to be cautious and re look at our strategy.
Read “famous strategy of stock market operators” article to know more about how to avoid getting trapped in this kind of operator’s game.
.
.
.
.
So, these were the lessons that we can learn from famous investing quote “Be fearful when others are greedy” of Warren Buffett.
You can checkout this link Be Greedy when others are Fearful to read about the next part of quote.
Hoping that this article will somewhere help you to understand stock market more.
Good luck : )
