Be Greedy when others are Fearful

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There are 2 ways in which investors behave in a volatile market.
Either they participate or they stay away. When you say that in Hindi, it sounds the same - भाग लो (Bhaag lo). Historically it has been observed that investors follow their heart rather than their head when it comes to investing.
The chart highlights two aspects common to investors seen over the 15 year trend - 1) They follow a herd mentality and 2) They follow 2 emotions - Greed & Fear. These trends indicate that majority investors think alike. They buy when the markets rise (out of greed) & sell when the markets fall (out of fear). Sadly, these trends are detrimental to long term wealth creation.
What is actually needed is consistency, irrespective of market conditions. Consistency is harder when no one is cheering the markets (especially in the current situation). That's the time, you must cheer yourself & stay invested. A legendary investor suggests being contrarian to the herd - be greedy when others are fearful & be fearful when others are greedy. That's because risks are higher in bull markets & opportunities are more in bear markets.
In sum, volatile markets are your chance to participate (भाग लो) in long term wealth creation. Running away (भाग लो) at this juncture will be a missed opportunity for sure.

About the author

Satish Prabhu is an avid blogger and has written close to 300 blogs on the basics of investing. He prefers the short story-telling format for his blogs and writes motivational life stories which are then weaved to give a message on investing. While content writing is his forte, financial literacy initiatives are close to his heart. He feels that investors can create wealth not by investing more money but by improving their behaviour with money. His stories give the message of patience, perseverance and resilience, the keys behavioral traits to be imbibed by investors. He is greatly inspired by the book ‘Psychology of Money’ by Morgan Housel. You can read all his blogs on his LinkedIn page.
On the professional front, Satish is the Vice President & Head of Content & Direct Customer Engagement at Franklin Templeton (FT) Asset Management (India) Pvt. Ltd since December 2013. Prior to FT, he worked for 8 years with CRISIL Ltd. (a Standard and Poor’s Company) and for over 7 years with the Stock Holding Corporation of India Ltd. (SHCIL).
He speaks at various investor education forums, conducts knowledge sharing sessions, webinars, podcasts for investors, advisors, relationship managers, corporates, among others.


















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